On February 13, 2017, David Rotman writes on MIT Technology Review:
Artificial intelligence could dramatically improve the economy and aspects of everyday life, but we need to invent ways to make sure everyone benefits.
Last October, Uber had one of its self-driving trucks make a beer run, traveling 200 kilometers down the interstate to deliver a cargo of Budweiser from Fort Collins to Colorado Springs. A person rode in the truck but spent most of the trip in the sleeper berth, monitoring the automated system. (The test came just a few weeks after Uber had announced its driverless car service in Pittsburgh.) The self-driving truck developed by Uber’s recently acquired Otto unit reflects remarkable technological achievements. It also provides yet another indicator of a looming shift in the economy that could have deep political consequences.
It is uncertain how long it will take for driverless trucks and cars to take over the roads. For now, any so-called autonomous vehicle will require a driver, albeit one who is often passive. But the potential loss of millions of jobs is Exhibit A in a report issued by the outgoing U.S. administration in late December. Written by President Obama’s top economic and science advisors, “Artificial Intelligence, Automation, and the Economy” is a clear-eyed look at how fast-developing AI and automation technologies are affecting jobs, and it offers a litany of suggestions for how to deal with the upheaval.
It estimates that automated vehicles could threaten or alter 2.2 million to 3.1 million existing U.S. jobs. That includes the 1.7 million jobs driving tractor-trailers, the heavy rigs that dominate the highways. Long-haul drivers, it says, “currently enjoy a wage premium over others in the labor market with the same level of educational attainment.” In other words, if truck drivers lose their jobs, they’ll be particularly screwed.
It is hard to read the White House report without thinking about the presidential election that happened six weeks before it was published. The election was decided by a few Midwest states in the heart of what has long been called the Rust Belt. And the key issue for many voters there was the economy—or, more precisely, the shortage of relatively well-paying jobs. In the rhetoric of the campaign, much of the blame for lost jobs went to globalization and the movement of manufacturing facilities overseas. “Make America great again” was, in some ways, a lament for the days when steel and other products were made domestically by a thriving middle class.
But many economists argue that automation bears much more blame than globalization for the decline of jobs in the region’s manufacturing sector and the gutting of its middle class. Indeed, in his farewell speech to thousands in a packed convention hall in Chicago, President Obama warned: “The next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation that makes a lot of good middle-class jobs obsolete.”
The White House report points in particular to the current wave of AI, which it describes as having begun around 2010. That’s when advances in machine learning and the increasing availability of big data and enhanced computation power began providing computers with unprecedented capabilities such as the ability to accurately recognize images. The report says greater deployment of AI and automation could boost economic growth by creating new types of jobs and improving efficiency in many businesses. But it also points to the negative effects: job destruction and related increases in income inequality. For now at least, “less educated workers are more likely to be replaced by automation than highly educated ones.” The report notes that so far automation has displaced few higher-skill workers, but it adds: “The skills in which humans have maintained a comparative advantage are likely to erode over time as AI and new technologies become more sophisticated.”
Labor economists have been pointing out the employment consequences of new digital technologies for several years, and the White House report dutifully lays out many of those findings. As it notes, the imminent problem is not that robots will hasten the day when there is no need for human workers. That end-of-work scenario remains speculative, and the report pays it little heed. Instead, it is far more concerned with the transition in our economy that is already under way: the types of jobs available are rapidly changing. That’s why the report is so timely. It is an attempt to elevate into Washington political circles the discussion of how automation and, increasingly, AI are affecting employment, and why it’s time to finally adopt educational and labor policies to address the plight of workers either displaced by technology or ill suited for the new opportunities.
It is “glaringly obvious,” says Daron Acemoglu, an economist at MIT, that political leaders are “totally unprepared” to deal with how automation is changing employment. Automation has been displacing workers from a variety of occupations, including ones in manufacturing. And now, he says, AI and the quickening deployment of robots in various industries, including auto manufacturing, metal products, pharmaceuticals, food service, and warehouses, could exacerbate the effects. “We haven’t even begun the debate,” he warns. “We’ve just been papering over the issues.”
Left out
It is often argued that technological progress always leads to massive shifts in employment but that at the end of the day the economy grows as new jobs are created. However, that’s a far too facile way of looking at the impact of AI and automation on jobs today. Joel Mokyr, a leading economic historian at Northwestern University, has spent his career studying how people and societies have experienced the radical transitions spurred by advances in technology, such as the Industrial Revolution that began in the late 18th century. The current disruptions are faster and “more intensive,” Mokyr says. “It is nothing like what we have seen in the past, and the issue is whether the system can adapt as it did in the past.”
Mokyr describes himself as “less pessimistic” than others about whether AI will create plenty of jobs and opportunities to make up for the ones that are lost. And even if it does not, the alternative—technological stagnation—is far worse. But that still leaves a troubling quandary: how to help the workers left behind. “There is no question that in the modern capitalist system your occupation is your identity,” he says. And the pain and humiliation felt by those whose jobs have been replaced by automation is “clearly a major issue,” he adds. “I don’t see an easy way of solving it. It’s an inevitable consequence of technological progress.”
The problem is that the United States has been particularly bad over the last few decades at helping people who’ve lost out during periods of technological change. Their social, educational, and financial problems have been largely ignored, at least by the federal government. According to the White House report, the U.S. spends around 0.1 percent of its GDP on programs designed to help people deal with changes in the workplace—far less than other developed economies. And this funding has declined over the last 30 years.
The picture is actually even worse than those numbers alone suggest, says Mark Muro, a senior fellow at the Brookings Institution. Existing federal “readjustment programs,” he says, include a collection of small initiatives—some dating back to the 1960s—addressing everything from military-base closings to the needs of Appalachian coal-mining communities. But none are specifically designed to help people whose jobs have disappeared because of automation. Not only is the overall funding limited, he says, but the help is too piecemeal to take on a broad labor-force disruption like automation.
Some observers, spearheaded by a clique of Silicon Valley insiders, have begun arguing for a universal basic incomeas a way to help those unable to find work. Wisely, the White House report rejects such a solution as “giving up on the possibility of workers’ remaining employed.” As an alternative, Muro proposes what he calls a “universal basic adjustment benefit.” Unlike the universal basic income, it would consist of targeted benefits for those seeking new job opportunities. It would provide such support as wage insurance, job counseling, relocation subsidies, and other financial and career help.
Such generous benefits are unlikely to be offered anytime soon, acknowledges Muro, who has worked with manufacturing communities in the Midwest (see “Manufacturing Jobs Aren’t Coming Back”). However, the presidential election, he suggests, was a wake-up call for many people. In some ways the result was “secretly about automation,” he says. “There is a great sense of anxiety and frustration out there.”
The question, then, is whether the looming onslaught of AI will make existing tensions even worse.
Cloudy days
No one actually knows how AI and advanced automation will affect future job opportunities. Predictions about what types of jobs will be replaced and how fast vary widely. One commonly cited study from 2013 estimated that roughly 47 percent of U.S. jobs could be lost over the next decade or two because they involve work that is easily automated. Other reports—noting that jobs often involve multiple tasks, some of which might be easily automated while others are not—have come up with a smaller percentage of occupations that machines could make obsolete. A recent study by the Organization for Economic Cooperation and Development estimates that around 9 percent of U.S. jobs are at high risk. But the other part of the employment equation—how many jobs will be created—is essentially unknowable. In 1980, who could have predicted this decade’s market for app developers?
In the past, new technologies have greatly expanded overall employment opportunities. But no particular economic rule dictates that this will always be true. And some economists warn that we must not be overly sanguine about the consequences of automation and AI.
“AI is very much in its infancy,” says MIT’s Acemoglu. “We don’t really know what it can do. It’s too soon to know its impact on jobs.” A key part of the answer, he says, will be to what extent the technologies are used to replace humans or, alternatively, to help them carry out their jobs and expand their capabilities. Personal computers, the Internet, and other technologies of the last several decades did replace some bank tellers, cashiers, and others whose jobs involved routine tasks. But mainly these technologies complemented people’s abilities and let them do more at work, says Acemoglu. Will that pattern continue? “With robots, and down the line with artificial intelligence, the replacement part might be far stronger,” he cautions.
Not only might automation and AI prove particularly prone to replacing human workers, but the effects might not be offset by the government policies that have softened the blow of such transitions in the past. Initiatives like improved retraining for workers who have lost their jobs to automation, and increased financial protections for those seeking new careers, are steps recommended by the White House report. But there appears to be no political appetite for such programs.
“I’m very worried that the next wave [of AI and automation] will hit and we won’t have the supports in place,” says Lawrence Katz, an economist at Harvard. Katz has published research showing that large investments in secondary education in the early 1900s helped the nation make the shift from an agriculture-based economy to a manufacturing one. And now, he says, we could use our education system much more effectively. For example, some areas of the United States have successfully connected training programs at community colleges to local companies and their needs, he says, but other regions have not, and the federal government has done little in this realm. As a result, he says, “large areas have been left behind.”
One problem the growing adoption of AI could make much worse is income inequality (see “Technology and Inequality”) and the sharp divisions between the geographic areas that benefit and those that don’t. We don’t need the expert-written White House report to tell us that the impact of digital technologies and automation in large swaths of the Midwest is very different from the effects in Silicon Valley. A post-election analysis showed that one of the strongest predictors of voting behavior was not a county’s unemployment rate or whether it was wealthy or poor but its share of jobs that are “routine”—economists’ shorthand for ones that are easily automated. Areas with a high percentage of routine jobs overwhelmingly went for Donald Trump and his message of turning back the clock to “make American great again.”
The economic anxiety over AI and automation is real and shouldn’t be dismissed. But there is no reversing technological progress. We will need the economic boost from these technologies to improve the lackluster productivity growth that is threatening many people’s financial prospects. Furthermore, the progress AI promises in medicine and other areas could greatly improve how we live. Yet if we fail to use the technology in a way that benefits as many people as possible (see “Who Will Own the Robots?”), we risk fueling public resentment of automation and its creators. The danger is not so much a direct political backlash—though the history of the Luddites suggests it could happen—but, rather, a failure to embrace and invest in the technology’s abundant possibilities.
Despite the excitement around AI, it is still in its early days. Driverless vehicles are fine on sunny days but struggle in the fog or the snow, and they still can’t be trusted in emergency situations. AI systems can spot complex patterns in massive data sets but still lack the common sense of a child or the innate language skills of a two-year-old. There are still very difficult technical challenges ahead. But if AI is going to achieve its full economic potential, we’ll need to pay as much attention to the social and employment challenges as we do to the technical ones.
https://www.technologyreview.com/s/603465/the-relentless-pace-of-automation/
Gary Reber Comments:
Once again, an article produced by academia which ONLY relates non-human productive means to job losses and what to do about creating jobs for those who loose their jobs due to the employment of non-human productive means. No where is their even a mention about property ownership rights, the invisible structure, that are and will be tied to non-human productive means now employed and that will be employed in the future.
There should be no questions as to whether fast-developing AI and automation technologies affect jobs or that the competitive prospects of employing non-human productive means in the future will be a global race to economic independence and greatness.
As a society, we need to develop and implement solutions that will empower our citizens to gain property ownership rights in the future development of the relentless pace of non-human productive means, made possible with rapid advances in machine learning and the increasing availability of big data and enhanced computation power. Greater deployment of non-human AI and automation has the potential to significantly boost economic growth by continually improving productive efficiencies, which in the process will create new types of jobs as well as destroy jobs.
The way to avoid economic inequality in the process is to finance the formation of all non-human productive means in ways that create new owners of the wealth-creating, income-producing assets formed. We should be shifting our focus on skills development to address the plight of workers whose jobs have disappeared because of automation, which will erode at an even faster exponential rate as AI and new technologies become more sophisticated and displace workers, and instead, focus on ownership creation of all future non-human productive means whereby EVERY child, woman, and man is a productive capital (non-human means of production) owner.
The reality is that while automation has been displacing workers from a variety of occupations, most predominately in manufacturing, we are on the cusp of an intensified technological revolution in which AI and the quickening deployment of robotics of all manner will impact all industries and exacerbate the effects of job losses and disruptions to an antiquated system focused on job creation rather than ownership creation.
As stated in the article, there is no reversing technological progress. We will need the economic boost from these technologies to improve the lackluster productivity growth (less than 3 percent annually) that is threatening many people’s financial prospects who now own capital assets. But most important is that we aim for growth in double digits annually while simultaneously empowering EVERY child, woman, and man to acquire ownership stakes in the non-human means that will propel our productivity growth.
I do not agree with the solution the author references to providing income for millions in a future where there will be hordes of citizens of zero economic value. Existing and future jobs will be affected by the exponential impact the non-human factor of production has on how our economy produces goods, products and services, allowing us to produce more goods, products, and services with far less or the same amount of human labor, doing work that humans are entirely not capable of or would rather not toil at, and doing such most efficiently and at greater consistent quality at less costs to the business corporations who substitute labor workers with the non-human means of production.
The “guaranteed annual income” is a “redistribution” solution that uses the coercive powers of government to create a society wherein all citizens will eventually become dependent for their economic well-being on an elite wealthy capital ownership class who control the State, instead of empowering citizens as owners to meet their own consumption needs with government becoming more dependent on economically independent citizens.
The proposal and other similar proposals depend on taxation of those who contribute productively to the economy, whether through their labor or their productive capital assets they own (or both).
The only way to far greater prosperity, opportunity, and economic justice is to embrace technological innovation and invention and the resulting human-intelligent machines, super-automation, robotics, digital computerized operations, etc. as the primary economic engine of growth.
But significantly, unless we reform our system to empower EVERY American to acquire as individuals (not collectively), via pure, interest-free insured capital credit loans, viable full-ownership holdings (and thus entitlement to full-dividend earnings and voting) in the corporations growing the economy, with the future earnings of the investments paying for the initial loan debt to acquire ownership, the concentration of ownership of ALL future productive capital will continue to be amassed by a wealthy minority ownership class. Companies will continue to globalize in search of “customers with money” or simply fail, as exponentially there will be fewer and fewer customers to support their businesses worldwide. Why, because the majority will be disconnected from the dividend income derived from the non-human means of production that is replacing the need for labor workers who earn wages and salaries, which are then used to purchase goods, products, and services.
If we do not reform the system, soon, industrial monopoly capitalism will reach its twin goals: concentration of productive capital ownership among the elite ownership class and work performed with as few labor workers and the lowest possible wages and salaries.
The “guaranteed annual income” proposal and similar proposals do not eliminate the further concentration of productive capital ownership among the already wealthy capital ownership class. Instead, they attach a tax on those who are productive rather than providing equal opportunity for EVERY child, woman and man to contribute productively to the economy via their ownership of non-human productive means.
Significant substitution of labor workers with the non-human means of production is a never-ending process, and the speed at which this shift in the technologies of production occurs is dependent on the demand for economic growth fueled by “customers with money.” No or decreasing levels of “customers with money” means economic growth halts or becomes slower. All redistribution proposals seek to increase the level of “customers with money” by taxing those who are productive and redistributing the income — not the ownership and control — to those who need income, instead of creating the condition for EVERY citizen to produce income and become self-sufficient to meet their own consumption needs.
The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.
The result is that the price of goods, products, and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their goods, products or services.
No one can deny the fact that over the past century there has been an ever-accelerating shift to productive capital — which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 239 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advances amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.
People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive — the core function of technological invention and innovation. Binary economist Louis Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital, in Kelso’s terms, does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary.
Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the American economy.
It is this ignorance of the necessity for broadened individual wealth-creating, income-producing capital simultaneously with the growth of the economy that is the real problem. If we financed what growth we have in ways that create new capital owners and the earnings of that capital growth were fully paid out as dividend income to the owners, this would create more “customers with money” to demand exponential and environmentally responsible growth to realize general affluence for EVERY child, woman, and man. Creating demand is how to speed productivity growth, which also will create significant employment opportunities as labor workers also will be needed to work in conjunction with the non-human means of production to build a future affluent economy. This, in turn, will substantially increase tax revenues to support education and infrastructure revitalization and expansion and other expenditures of societal development.
In a democratic growth economy, based on Kelso’s binary economics (human and non-human productive inputs), the ownership of productive capital assets would be spread more broadly as the economy grows, without taking anything away from the 1 to 10 percent who now own 50 to 90 percent of the corporate wealth. Instead, the ownership pie would desirably get much bigger and their percentage of the total ownership would decrease, as ownership gets broader and broader, benefiting EVERY citizen, including the traditionally disenfranchised poor and working and middle class. Thus, productive capital income, from full earnings dividend payouts, would be distributed more broadly and the demand for products and services would be distributed more broadly from the earnings of capital and result in the sustentation of consumer demand, which will promote environmentally responsible economic growth and more profitable enterprise. That also means that society can profitably employ unused productive capacity and invest in more productive capacity to service the demands of a growth economy. As a result, our business corporations would be enabled to operate more efficiency and competitively, while broadening wealth-creating ownership participation, creating new capital owners and “customers with money” to support the goods, products, and services being produced.
We need to understand that what has prevented us from solving economic inequality is manifested in the myth that labor work is the ONLY way to participate in production and earn income, and that individual talent and effort are what distinguish the wealthy from the non-wealthy. Long ago that was once true because labor provided 95 percent of the input into the production of products and services. But today that is not true. Physical capital provides not less than 90 to 95 percent of the input. When the “tools” of capital owners replace labor workers (non-capital owners) as the principal suppliers of products and services, labor employment alone becomes inadequate. Thus, we are left with government policies that redistribute income in one form or another.
A significant problem has been that the Federal Reserve has been pushing down interest rates to try to boost demand, as growing productivity increases the ability of the economy to produce more goods, products, and services. But the system, as structured, benefits those already wealthy with lower interest rates that enable the present wealthy capital ownership class to use cheap capital credit secured by their past savings and equity. Instead, what we should do is lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers, or create inflation. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings.
The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each future capital formation transaction, determined by the same expertise that determines it today — management and banks — that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. Such capital credit insurance would substitute for the security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
We can no longer disregard the reality that productivity gains, without system reform, will continue to concentrate and further enrich the already wealthy capital ownership class. The solution to earning higher income is through capital ownership, not jobs.
Productivity growth should never be viewed as the enemy of workers, that is ONLY if workers and in the larger context, EVERY child, woman and man share in the productivity gains as OWNERS, and not be limited to wages alone or a redistributed basic income or a living wage provided by the State for anyone doing public sector or non-profit work.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice.
Support the enactment of the proposed Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/. And The Capital Homestead Act brochure, pdf print version at http://www.cesj.org/wp-content/uploads/2014/11/C-CHAflyer_1018101.pdf and Capital Homestead Accounts (CHAs) at http://www.cesj.org/learn/capital-homesteading/ch-vehicles/capital-homestead-accounts-chas/
Comment from Center for Economic and Social Justice (www.cesj.org):
Bill Gates’ idea about taxing robots has been getting a lot of play recently. The problem is that it would create more problems that it solves. The solid foundation of any economy is whether it can produce what people consume, and whether every producer is a consumer, and vice versa. To put it more simply, if you want a sound economy, you have to produce what you consume, and consume what you produce, one way or another. Thus, if only labor is productive, then everybody needs to own his or her own labor — which, unless you’re a slave, is always the case. If only land is productive, then everybody needs to own land. If only technology (“robots”) is productive, then everybody needs to own technology. Obviously, claiming that only one factor is productive is wrong; in a perfect world, everyone needs to own each factor of production, whether labor or capital, in the same proportion as it is used in production. This is not usually feasible, especially when people take advantage of their social nature and specialize, but it gives a good rule of thumb to follow. For example, if technology is ten times more productive than human labor, someone has to own technology that will produce ten times what his or her labor would produce just to have a decent income (absent distortions such as minimum wage laws and redistribution, of course). The bottom line is that only by owning — not taxing — robots will ordinary people gain enough income and restore Say’s Law of Markets so that all production is for consumption, and people have enough production to be able to consume.
