[Carlhole]

The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future
(Download a free copy at this link)

What will the economy of the future look like?
Where will advancing technology, job automation, outsourcing and globalization lead?
Is it possible that accelerating computer technology was a primary cause of the current global economic crisis—and that even more disruptive impacts lie ahead?

This groundbreaking book by a Silicon Valley computer engineer and entrepreneur explores these questions and shows how accelerating technology is likely to have a highly disruptive influence on our economy in the near future—and may well already be a significant factor in the current global crisis.

Amazon

AUTOMATION CHANGES EVERYTHING, December 2, 2009
By W. Sheridan "Epistemological Entrepreneur" (Ottawa, Canada)

When manufacturing automation produced the Great Depression there were forecasts that the Price System was doomed because the income from jobs was what provided purchasing power for the mass market. But instead of collapse, a transition was begun whereby the labour market was shifted from manufacturing employment to service employment.

But in The Industrialization of Intelligence, Noah Kennedy warned us that the same processes that had eliminated jobs in manufacturing would eventually be applied to intellectual work. Martin Ford is now announcing that we are very close to massive layoffs amongst Knowledge Workers because everything from inventory re-stocking, to legal research, to medical diagnostics, will be progressively automated as well.

No jobs means no pay cheques, so a decline of 30% in the size of the workforce will bring ruin to both ordinary consumers and mass marketing. Declining sales means declining profits, and that leads to declining investments and declining innovation. The market will not be able to shift sufficient employment to any other sector to recreate jobs. Market-financed automation will undermine the incomes of virtually everyone.

It's time to rethink the way income is distributed as well as the lifestyles that consumers lead. If economic productivity is taxed at the same rate as previous labour costs, transfer payments can then be established to provide income to otherwise unemployed consumers. These transfers should be enough to cover the basics: food, clothing, shelter, medical treatment, transportation, education, and entertainment. There is literally no other way to get purchasing power into the hands of consumers.

To keep people motivated to continue "behaving themselves," the transfer rates could be tied to incentives for responsible and creative lifestyles. More education would result in a somewhat higher transfer payment, as would volunteer work, and other helpful and creative endeavours. These are some of Mr. Ford's suggestions, and they are all very carefully thought out and presented. Since we will all be impacted by the continuing process of automation, we all need to read this book, and engage in conversation regarding how and when such steps need to be taken.

In the book, he asks the reader to guess when, approximately, 75% of the skills possessed by the human workforce presently will be automated by machines. He suggests that this will be a lot sooner than most people think and that it will really present a difficult economic problem. He asks readers to give consideration to the various assumptions we make about humans and machines in the workplace.

Imagine if a machine like IBM Watson were able to replace, not only Customer Service Reps and Telemarketers, but also lawyers, accountants, and other knowledge workers. The author gives an example of a career which could soon be automated entirely - that of Doctor of Radiology, a profession, which in the past, was attractive because doctors didn't need to deal with patients; they could just interpret charts and make recommendations. The author compares this career with that of Auto Mechanic, which would be very difficult to automate.

[Pops]

George Jetson's job was to push one button, repeatedly, for one hour, one day a week and he thought he had it pretty rough. I think this really is a big problem, and along with less regressive income tax and global trade the reason for the end of the middle class, thanks for the link.

GW & peak oil vs. globalization of labor markets & automation seem to be pulling in opposite directions don't they? One toward lower consumption and the other toward ever greater consumption - and on top is population growth.

The idea of taxing any kind of productivity and transferring it to consumers is a little hard for me to get my brain around as a substitute for wages but I guess that is the idea of a value added tax after all isn't it? Does a VAT add to the final cost of an item or does it only reduce the profit?

[Carlhole]

The idea of taxing any kind of productivity and transferring it to consumers is a little hard for me to get my brain around as a substitute for wages but I guess that is the idea of a value added tax after all isn't it? Does a VAT add to the final cost of an item or does it only reduce the profit?

Assuming that machines which can perform 75% of the skillset of the present workforce will be here very soon, there will ALWAYS be an increasing number of people who are out-of-work. A much higher level of automation could easily be reached in the very near future, taking out professional people with intellectual skills and training (Knowledge Workers).

Consider, for example, an online psychologist based on IBM Watson (present technology; download and watch the NOVA special on Watson if you don't know about the guts of how it works).

Instead of having to pay someone $150 per hour to converse and perhaps learn about one's life, psychology and options, users could log on to an internet site. The technology is good enough that you could replace your need for most of the professional discussion - depending on the size and quality of the knowledge database and Watson continual readings. If you had a daily chat or dialogue online with the machine, it would be like keeping a journal from which Dr. Watson would come to recognize your personlity, quirks, vulnerabilities, insecurities, etc... How many people would opt for that instead of paying a flesh and blood psychologist? Many.

You can make arguments about Accountants and Laywers too using Watson-like technology. Customer Service Reps and Telemarketers? Kiss you ass goodbye.

Even the cheap labor costs in the developing world are at risk to automation since machines can be developed that are far, far cheaper to use than even dirt cheap Chinese human labor/intelligence.

What will people do with themselves? How will this change the economy?

These forces of automation are at work now IMO. They are a larger-than-realized factor in the anemic global economic recovery. If you imagine the economy as a flowing river from which people or companies add and withraw wealth, then automation causes the river to get smaller or run dry (because so many consumers have been displaced by machines). So how do businesses stay viable of there are no consumers for their products and services? Answer: Consumers need an income stream (not equal for everyone!) so that they can continue to make purchases. -- That is the authors suggestion, but he say that he is mostly trying to prompt a wider discussion automation's effects on the economy. I think it's interesting.

I brought this topic up at a coffee shop the other day and someone there suggested that people increasingly will gravitate to virtual realities like Second Life as VR technology gets more sophisticated. Sounds like Life-With-Balls-Chopped-Off to me. I'm sure the real ego giants amongst us will not be happy settling for that.

There are no philosophic papers written about this stuff that I can find.

Remember, we are not talking about The Singularity here; only the point where 75% of human skills can be performed better, faster, more economically by machines. Obviously human talent runs deep' it will take a long time for machine to best the bast of us. But for most ordinary skills, machines will soon be giving ordinary people some intimidating competition.

[Pops]

I've mentioned my trade many times because it's the perfect example.

I apprenticed in a print shop back in the '70s when a simple typesetting machine was the size of a couple of washing machines - everything was photo/chemical based, all skilled hand work from photography/illustration to typeset to pasteup to film, masking/stripping, platemaking and of course printing. In large operations like newspapers, magazines or large print shops, each step might have had one or more people specializing in a single task and there could be a dozen specialties.

Today ALL those jobs are gone and have been for years. Even small-time custom photography and illustration is about passe with the huge amount of online stock - it used to cost 10x what royalty free image now costs on iStock just to have a search done at Getty or Comstock.

Today the designer emails a press-ready file to the printer who sends it to the platemaker (a laser imagesetter) that "prints" a plate ready for the press - in fact short-run digital is almost indistinguishable from offset and a gret value at below 1,000 copies and we all have a consumer version of one of those on our desktop.

Oh yeah, the designer can be anywhere so there really isn't a lower limit to his wage either.

It really is a big deal and no amount of trade restrictions are gonna do anything about it.

[vision-master]

< 500,000,000 should do the trick.

[patience]

What happens when automation is implemented is a matter of DECISION on the parts of both management and labor of a given company, and is affected by the nature of that particular company and industry. It can go a lot of directions.

This whole topic is a false dilemna that I am intimately familiar with and therefore disgusted when somebody wants to capitalize on the ingrained fears of the public by oversimplifying the problem to sell a book. I spent over 30 years as an engineer designing and implementing factory automation, and in all that time it ALWAYS resulted in MORE people being hired! That really flies in the face of what is proposed in this thread, but it is true.

What happens most often is that more goods are produced at a lower cost, sold at a lower price. The factories then grow, and employ even more people. Think electronics here, and the history of, say, calculator prices. The first commercial hand held calculator that I saw was made by Hewlett Packard, the HP-35: http://www.hpmuseum.org/hp35.htm and cost $400--sometime in the early 1970's!! I bought one of similiar capability a couple months ago for about twenty bucks, and in the meantime, the value of that twenty bucks went down dramatically. Are fewer people now employed making calculators?? No. In fact, there are a lot more people employed making them now, but the key is, NOT IN THE US. Those who justifiably fear losing their jobs often blame automation when the real problem has been something else, like offshoring of manufacture from the US to Asia.

There ARE cases where automation reduced jobs, like the printing industry that Pops is familiar with. However, those people most often found other jobs, and continued to buy comparatively cheaper printed products, and more of them. As witness, check your mailbox for junk mail. Yes, skillsets pertaining to a given older technology get outmoded and superceded by new ones. In many cases, I was the one who trained our existing workers to utilize the new technologies, who were then more productive and soon were making MORE MONEY, and buying cheaper goods that resulted from that greater productivity. Bottom line--their standard of living went UP, and so did employment.

I don't mean to minimalize the impact on individual lives where changing technologies destroyed the usefulness of their skills. There is a painfully wrenching period of adaptation involved before those individuals can retrain and benefit from the changes. Too many times, they refuse to retrain or learn a new job, instead falling down the economic ladder while others embrace the new ways and become a part of it. Many times, a given factory is outmoded and closed, causing a blight in a given area. Other areas, however, benefit in the LONG term. The benefitted area may be in India or China, but that does not make it the fault of automation. Instead, globalization by international companies is the culprit.

Even more often, when a job is "dumbed down" by automation, it becomes something that unskilled labor in 3rd world countries could do. The jobs went there, aided and abetted by govt. policies to benefit big corporations that were heavy campaign contributors. Like GE, who has been in the news lately for this sort of thing, paying little or no taxes in their parent country.

The reasons for the improved standard of living over the past century is automation in mass production that utilizes ever greater amounts of----wait for it---FOSSIL ENERGY, instead of the sweatshop routine. We need to be concerned more about how we maintain a standard of living better than circa 1850 when the cost of fossil fuels precludes their use in such massive amounts for manufacturing, and particularly, food production.

I have only touched on a very few of the many factors involved in why people lost jobs in the US. Rest assured, automation was NOT a prime mover in that. Look instead to govt. policies, corrupt officials, major bank interests/speculators, currency fluctuations, and other sins of TPTB.

One example of the above, involving currency valuations:

In the mid-1980's, I ordered some threading taps for a sample production run at a factory. I was used to paying about a buck-fifty for them. I found a discount supplier who sold me two dozen taps for about $15 = about half price, AND he threw in a FREE 1" micrometer that had been costing us about $50. These turned out to be top quality tools made in POLAND, who has some of the finest toolmakers on the planet. But at that time, Poland was going through a horrible time trying to get out from under the USSR, and the currency of Poland was trashed. Their currency was worth zilch compared to the US dollar at that time.

Soon after that, very high quality, highly automated US tool company (Regal-Beloit) closed a plant near where we live, because they could not compete with imported tools. I doubt seriously if those directly responsible for the low value of the Polish Zlotny (?) currency ever shed a single tear about the losses to Regal-Beloit.

This is FAR too complex a topic to say that automation destroys jobs. If that were the case, why don't we still have the employment levels of the 19th century? I call BS.

[patience]

That post was getting pretty long.

A prime example of the LACK of automation costing US jobs is the steel industry. After WWII,, the US steel industry had the world by the short and curlies, the rest of the world's productive capacity being blown to bits in the war. US manufacturers had no competition and could sell whatever they made at whatever price they put on it. They quickly got the idea that they were geniuses and could do no wrong. This resulted in CEO's treating steel companies like a cash cow and let their fixed assets run into the ground from lack of maintenance and lack of investment in improved technologies.

The rest of the world pulled themselves up by their collective bootstraps and guess what? When the US faced some REAL competition, they fell far short and the business went to Canada, Germany, Japan, and Brazil where a lot of it resides today. Yes, there is more to this story, too (again, currency differences and lower wages rates enter in), and I have oversimplified, but nowhere near to the degree in the OP article that wants us to think that automation will kill us all. Bah! Humbug!

[patience]

I said in the first post:
"What happens most often is that more goods are produced at a lower cost, sold at a lower price. The factories then grow, and employ even more people."

That is what has happened, many times, but it depends on that "eternal growth model" so much despised around this site. In fact, automation WILL reduce job levels in a post-peak world, when eternal growth fails to come about. But that has not been the case to date, and it will be a long time coming, IMHO. We still have a lot of energy to squander before that happens.

Automation is very simply a means to use cheap energy to our benefit. What is going to kick our collective butts is the loss of that cheap energy slave, not automation.

[Outcast_Searcher]

This is FAR too complex a topic to say that automation destroys jobs. If that were the case, why don't we still have the employment levels of the 19th century? I call BS.

Automation is destroying a LOT of low level skill jobs - both in manufacturing and in service.

Now, if we had a system that helped people get better educated throughout their working lives, that might not be a problem. Motivated people could move on to better jobs, and on we go (as long as cheap energy/resources hold out anyway).

HOWEVER, with the model now being having the govenment and the corporations always focused on the short term -- many people lack the resources (and at some point the motivation as well) to improve their skills.

The cheap jobs go to the machines or the cheapest labor offshore, and the average living standard for all but the rich slides ever downward as a long term trend if that remains true.

As an I/T guy, I foolishly thought this was a low-level worker problem only until broadband rather suddenly made MANY kinds of high paying work offshorable.

Now that the trend is well established in robotics, I think the author is generally right. Good luck maintaining your living standard without managing to get and maintain the latest and greatest skills over time.

[Pops]

I spent over 30 years as an engineer designing and implementing factory automation, and in all that time it ALWAYS resulted in MORE people being hired! That really flies in the face of what is proposed in this thread, but it is true.

So the capitalist, wanting to make a larger profit, invests in mechanization/automation/computerization knowing it will inevitably increase his labor cost and reduce his profit? I've never been in a factory but that doesn't ring true to my ear, Patience.

Automation increases productivity, it IS the growth model: more stuff – less labor – more profit.

I guess the question is, are there limits to how much stuff society can afford with stagnant wages?

[Pops]

What is going to kick our collective butts is the loss of that cheap energy slave, not automation.

There is that, but automation is a separate problem with or without cheap energy.

Productivity is constantly increasing, yet real wages are flat. Why? Because increased productivity (technology) makes capital's bargaining position stronger and labors position weaker.

[Pretorian]

Productivity is constantly increasing, yet real wages are flat. Why? Because increased productivity (technology) makes capital's bargaining position stronger and labors position weaker.

it also makes the stuff cheap and makes labourer roll around in this useless stuff and worry why other labourers have more stuff than him. If people would buy less stuff the labo'rs position would be stronger, and capital's weaker so i don't really get this blame game.

[Carlhole]

Robotic Labor Taking Over the World? You Bet – Here Are the Details

Let’s not be silly here, robots don’t want to kill all humans…they just want to take all their jobs. The accelerating rise in robot labor of the past decade, and its expansion into all areas of production, have led many to worry about the future of human workers. Yet how extensive is the robotic take over of labor? Our friends at Mezzmer Eyeglasses did some impressive research and created an even more impressive infographic explaining the present and future of robots in the workplace. Check out the Singularity Hub exclusive image below. With 9 million robots working in the world, and 4 million+ more scheduled to arrive next year, we’re clearly entering into a new age of automation. But will it bring a new era of unemployment with it?

[MD]

Automation reduces the cost of output. Simply put: more stuff available for more people at lower cost.

Like patience, who posted at length up thread, I spent the last thirty years automating manufacturing processes throughout the US. in fact I integrated my first "robot" back in 1986 or so.

Most of us in the automation game bought into the mantra that we were saving the world through our efforts, and in fact it was automation that made possible the productivity gains of the 90's that in turn kept many manufacturing companies here in the US.

Automation is of course very much a two-edged sword. Proponents point to a utopian future where humanity finally becomes balanced around our robotic servants.

Detractors point to a borg-like planet eating machine that will land us in Terminator future.

What's clear to me is that either future is entirely dependent on what we do. Automation is just another tool in our bag of tricks.

[Loki]

Automation is of course very much a two-edged sword.

I definitely see that in farming. Automation in the farming world mostly means tractor work, at least on the production side of things. I'd much rather use the tractor to cultivate a bed of vegetables than have to weed it by hand. I suppose that reduces the number of jobs for weeders, but that's fine with me, I get plenty of hours as it is, and I hate hand weeding.

The problem comes when only the richest farmers can afford the super-powerful tractors and all the fancy implements that more advanced automation requires---and of course that kind of capital investment requires more and more land to justify it. Small farmers can't afford to keep up, so they're either pushed out of business or relegated to niche markets.

I wish we could discuss appropriate technology more, and efficiency less. What technology can we develop that would improve the average American's quality of life, and advance equality of opportunity? Less R&D for how to develop million-dollar combines, more R&D for how to develop reasonably priced machinery for small farmers, for example.

But it seems technology development is focused on “efficiency” at all costs, i.e., how to be more productive with less labor. Yet the labor supply continues to increase, year after year after year. This strikes me as problematic long-term.

[nobodypanic]

This is FAR too complex a topic to say that automation destroys jobs. If that were the case, why don't we still have the employment levels of the 19th century? I call BS.

because, in general, we were able to maintain a rate of capital expansion that offset that tendency.

[Serial_Worrier]

http://www.reuters.com/article/2011/08/ ... 6B20110801

Foxconn to rely more on robots; could use 1 million in 3 years

So how many Chinese workers are gonna be out of a job in those 3 years?

[Schadenfreude]

CNN: "Are Jobs Obsolete

New technologies are wreaking havoc on employment figures -- from EZpasses ousting toll collectors to Google-controlled self-driving automobiles rendering taxicab drivers obsolete. Every new computer program is basically doing some task that a person used to do. But the computer usually does it faster, more accurately, for less money, and without any health insurance costs.

We like to believe that the appropriate response is to train humans for higher level work. Instead of collecting tolls, the trained worker will fix and program toll-collecting robots. But it never really works out that way, since not as many people are needed to make the robots as the robots replace.

And so the president goes on television telling us that the big issue of our time is jobs, jobs, jobs -- as if the reason to build high-speed rails and fix bridges is to put people back to work. But it seems to me there's something backwards in that logic. I find myself wondering if we may be accepting a premise that deserves to be questioned.

While this is certainly bad for workers and unions, I have to wonder just how truly bad is it for people. Isn't this what all this technology was for in the first place? The question we have to begin to ask ourselves is not how do we employ all the people who are rendered obsolete by technology, but how can we organize a society around something other than employment? Might the spirit of enterprise we currently associate with "career" be shifted to something entirely more collaborative, purposeful, and even meaningful?

We will be hearing about humans being displaced by machines for the rest of our lives, I'm afraid.

At the same time, the human population has now reached 7 billion and shows no sign of relenting.

There are going to be a lot of useless souls floating around who just don't possess any skills worth paying for.

[Kristen]

There are going to be a lot of useless souls floating around who just don't possess any skills worth paying for.

Who gets too choose what skills are useless?

[Lore]

There are going to be a lot of useless souls floating around who just don't possess any skills worth paying for.

Who gets too choose what skills are useless?

The markets do that.