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– CHAPTER 4 –

ADVANCING ROBOTIZATION

Without change, the problems of unemployment and inequality will worsen in the next twenty years. There will also be an unstoppable decline in the rate of conventional economic growth and a wave of robotization in manufacturing and repetitive services.

This new medical app on my phone is amazing! It synchs with the RFID tag in my jacket and all of my telemetry data is uploaded to a centralized database that auto-adjusts my meds mix to control my glucose. Need an adjustment? The drone from Walmart delivers what I need to my drone-dock overnight—anywhere in the world! It is amazing. . .! On the other hand, I want to sell my house—why isn’t anyone bidding on it? There used to be a lot of doctors in this neighborhood didn’t there? Also, there used to be a ton of delivery-drivers who came into my restaurant for breakfast every morning. . . wonder where they are . . .? If I don’t start to generate some revenue soon, how am I going to pay my mortgage until I find a buyer? Maybe I should get one of those robot cooks that I keep hearing about to lower my operating costs . . . ¹

THE SUBSTITUTION of humans by machines is something economists call “technological unemployment,” and it is as old as humankind itself. Even the caveman’s humble wheel made people redundant, because one person with a cart was able to push the same weight that several people had previously carried on their backs.

Today, the technologies used to replace people are rather different. It is now robots, computers, and other high-tech gadgets that are making people redundant, not wheels or sharpened flints.

At the beginning of the economic development process, as more capital is added, the agricultural sector gradually becomes more mechanized, and fewer people are needed to feed the population, so they move into manufacturing, the secondary economic sector. Then, as the manufacturing factories are equipped with machines, energy, and computers, fewer workers are needed there, so people focus on the next level of demand in society: services—the tertiary sector. Yet again, technological advances—this time in the form of computerization and robotization—gradually reduce the need for labor in repetitive service jobs. This frees people to do what machines cannot easily do—provide care, culture, and creativity. This is the fourth, and now emerging, economic sector.

Thanks to all sorts of remarkable developments in computing and robotics, many commentators and analysts believe that society is in the early stages of a new industrial revolution, one with the capacity to transform the way people live and work, just as the steam engine did two hundred years ago.

Computerization has already given lots of people the chance to develop exciting new careers and found new businesses. These new technologies could further transform societies and offer everyone the chance of more leisure time—depending, of course, on how they are introduced and how the rewards are divided.

The worry is what the new technologies could mean for jobs.

Technological unemployment is one of the main reasons joblessness has risen throughout the OECD during the last thirty years.² Although some of this is down to demographics and the changing economic structure of the rich world, the development of computers, as well as other sorts of automation and the Internet, has played a very large part, particularly since 2000. This explains why productivity in the United States rose by 2.5% a year in the first decade of the twenty-first century, while the number of available jobs fell by more than 1% a year.³

With the anticipated growth in computing power, the rate of technological unemployment is expected to rise in the coming decades, and most people are unprepared for what this might mean. As The Economist magazine put it, “the effect of today’s technology on tomorrow’s jobs will be immense—and no country is ready.”⁴

A well-known, though perhaps slightly alarmist, study published in 2014 by Oxford University’s Martin School⁵ suggested that as many as 47% of all U.S. jobs are at risk in the next two decades of being mechanized or partly mechanized and so largely eradicated by the next generation of smart machines. In economic terms, this means that fewer people will be needed to produce the same output. Costs will be lower and average earnings, for those left with a job, could be higher. But there will be fewer people with jobs.

The vulnerable jobs are not only those of factory machinists, retail workers, airport check-in staff, and burger flippers. Those employed doing packaging, logistics, and deliveries are at risk of redundancy, too. Thanks to clever computer algorithms, much of the work currently done by lawyers and bankers is also threatened. The research that armies of junior financiers do could be automated as well, with big data taking on the role of today’s market and business sector analysts.

Computers will even be able to replace many in the medical profession. Machines can already diagnose many diseases better than doctors and track the progress of many treatments more effectively, and image processors can analyze biopsies more accurately than lab technicians.

Thanks greatly to work done by Google, it may be possible to replace many bus, taxi, and van drivers, too (once the issue of liability insurance has been resolved). Train drivers and pilots can also be replaced, as can many university lecturers. Students may not like learning everything online, and bus passengers might feel uneasy about not having a driver, but they may have little option, because it will be cheaper.

According to the Oxford study, there is a risk, too, that much of the accountancy profession could disappear. Even journalists and soldiers are threatened with having to find new careers. Computers can already write articles well enough to replace sports and financial writers, and soldiers are being supplanted on the battlefield by robots and remotely controlled drones. The jobs of many hotel receptionists, cooks, and porters are said to be at risk, too.

Many export jobs in China and other countries with low labor costs could also disappear. If it is cheaper to manufacture goods with robots, many of the factories that moved to China and elsewhere in the last twenty-five years could move back to the developed world to reduce transport costs, though they will not bring many jobs.

Most jobs will remain, of course. The work of actors and actresses will be extremely hard to mechanize, though not impossible. A lot can be done using computer animation these days, as many photographic models may soon discover to their cost. Societies will still need to have firefighters, as well as clergy. Other reasonably secure jobs include care workers, dentists, and (some) fruit pickers. Those who offer warm hands in hospitals and nursing homes cannot easily be replaced either (though the Japanese are trying⁶). Strategic planners and barristers will always be in high demand, as well as athletes, artisans, florists, and hairdressers. Composers, novelists, and speakers’ agents will not be short of work in the future much either.

At the end of its report, the Oxford study contains a list of 702 jobs, ranked according to the likelihood of their being eradicated over the next two decades. It makes for interesting reading. If you want to ask yourself how safe your own job is, then the words you need to consider are: personal care, creativity, dexterity, perception, social intelligence, and originality. If your job needs these, you are pretty safe.

The jobs that are least vulnerable are those that require high levels of education or considerable skill—which will be very well paid—as well as those that generally require dexterity, repetitiveness, creativity, or physical presence—which will not be very well paid.

Even if a fraction of these anticipated changes occurred, there would be a revolution in the workplace—with widespread social consequences. Unless the transition is managed carefully, society could become even more polarized, with a small elite gaining the chance to earn even more, while the majority earns even less.

Moreover, the jobs that remain would be bitterly fought over because, in simple economic terms, the supply of workers will greatly exceed the demand, so the price of the average employee will fall. Social mobility would be reduced, too, because the options available to job seekers will shrink.

With fewer people working, less tax would be paid into government coffers. With higher unemployment, demand for welfare would rise.

There is, therefore, a risk that this wave of robotization and mechanization might overwhelm rich-world societies, cutting average wages more, widening social divisions further, and inflaming political discord as too many people chase too few jobs. As David Ricardo, a nineteenth-century economist who studied the effects of new technology on wages during the industrial revolution, showed, there is a risk that many people’s wages could fall below the level necessary for them to live.

Ricardo, who was greatly influenced by his close contemporary Adam Smith, realized that although new technologies increase business profits, they do not always increase workers’ incomes. He pointed out that, in general, new technologies tend to make life better for everyone, partly because they increase productivity and cut costs. They increase output. They also encourage innovation and retraining, as those who are forced out of work need to develop new skills to become competitive in the job market again.

But he also saw that there is a short-term price to pay for new technological development: higher unemployment and lower wages. These are generally outweighed by the long-term advantages—higher productivity, lower costs, more output, greater innovation, and self-improvement—but not always.