People are worried about robots taking jobs. Driverless cars are around the corner. Restaurants and shops increasingly carry the option to order by touchscreen. Google’s clever algorithms provide instant translations that are remarkably good.
Driverless cars are already here. Entire restaurants are automated. But, Google’s translation algorithms remain terrible. They are nowhere near the level that a human can do, but none of us could tell the difference between a Big Mac that a person made or one that a robot made.
Therein lies your problem: perspective. You are an academic, and the robots are not yet threatening your job. They will, someday, but it is not yet clear when or how.
But the economy does not feel like one undergoing a technology-driven productivity boom. In the late 1990s, tech optimism was everywhere. At the same time, wages and productivity were rocketing upward. The situation now is completely different. The most recent jobs reports in America and Britain tell the tale. Employment is growing, month after month after month. But wage growth is abysmal. So is productivity growth: not surprising in economies where there are lots of people on the job working for low pay.
This is what is known as cherry-picking. The 1990s did not see a recession but, rather, saw legislation passed that created an economic bubble that did not burst until well into the 2000s. If you borrow $1,000 one year and pay it back next year, you could say you made more money in the year you borrowed the money than you did the year you paid it back, but did you, really?
It is also cherry-picking because you’re just talking about America and Britain. Do you think robots don’t exist in Chinese factories? Do you think Africa is a robot-free zone? Surely you cannot be so foolish as to think that the entire nation of Japan houses not one single robot. Do you think that multinational corporations bring all their money back to the United States and Britain? Why not look at the global GDP per capita when talking about these things?
In 1990, according to the World Bank, the global GDP per capita was $4,262. In 2000, it had grown to $5,460. That is a remarkable 28% growth rate in the 1990s. What about the next decade? In 2010, the global GDP per capita had grown to $9,482, a 74% growth rate. In other words, despite your feelings about the matter, the rate of growth of global production across the 2000s more than doubled compared to the 1990s.
The 1990s and 2000s saw hundreds of millions of people enter the workforce at incredibly low wages, with almost all of their labor being amplified by technology.
The obvious conclusion, the one lots of people are drawing, is that the robot threat is totally overblown: the fantasy, perhaps, of a bubble-mad Silicon Valley — or an effort to distract from workers’ real problems, trade and excessive corporate power. Generally speaking, the problem is not that we’ve got too much amazing new technology but too little.
It’s mind-blowing to read this at Medium from a guy employed by The Economist. The Economist has a monthly circulation of about 1.5 million, or did in 2015, according to Wikipedia. On the web side of things, it has an Alexa rank of 2,092, an inconsequential number indicating a few thousand monthly visitors. Medium has a global Alexa rank of 395 and, last month, evidently saw 83.5 million visitors. That’s equivalent to 21.6 million visitors per week. It could replace some 14.4 The Economists. Do you think it employs 14.4 times as many people as The Economist? Hint: it doesn’t, and it’s nowhere close.
This isn’t even a matter of pure automation, but the leveraging of human labor by technology. One small staff of about 200 can replace dozens of staffs of 100s to 1000s of people in terms of the quantity of content they can bring to readers. On the impending automation front, I don’t know if the Editors’ Picks at Medium are automated, but it’s not hard to imagine a filtering system already existing that eliminates poor quality pieces from consideration, delivering the editors better pieces from which to select their picks, and that filtering system eventually developing into a robust algorithm that can predict what the editors would pick, thereby eliminating any need for an editor to participate in selecting the Editors’ Picks. Perhaps one person can oversee the process, and it can go from being the Editors’ Picks to being the Editor’s Picks.
The fact is, automation already began. It’s not a matter of when the robots start to take jobs — they already have — but how fast, in which sectors, and to what economic outcomes. It is entirely naive to think that technology does not amplify human productivity; do you really think it would take 100,000 people 20 years to build the Great Pyramid today? It wouldn’t, and in the future it will eventually take one person. But, what about those 100,000 people? Do we need them to be building us 100,000 pyramids? Do we, frankly, need them to be doing anything at all when one guy and a robot army can do anything better? On a smaller scale, all those little plastic toy soldiers you played with as a kid that took people in a factory to make, people on ships and in trucks to transport to you, and people in a store to shelve and sell to you can now be printed by you, alone, with a 3D printer. That 3D printer is just another type of automation, a robot you can put in your home.
Automation is just one element of technological growth. It’s interesting, again, to note that you selected the American and British economies in your analysis of how its effects are being felt when it is the third-world that will feel that first (and it already is, if you look at the stagnation in employment in developing economies). All the jobs that got shipped overseas in the 1990s in the interest of exploiting cheap labor will evaporate, because lowering shipping costs and using a legion of robots being serviced by one low-wage worker is cheaper than employing a factory full of underpaid children in Bangladesh. Let’s see how Amazon does it:
Remember, people used to do every task you see in that video. While the robots may or may not cause people to get fired, if they represent an efficiency growth of 20% in a facility that employs 4,000 people, then that’s somewhere in the neighborhood of 800 new jobs that didn’t need to get added in order to increase output to meet increasing demand, and I find it highly unlikely that the 4,000 employees there at present saw a 20% increase in their wages. Jeff Bezos did make it to third on the Forbes list this year, though, with a net worth of $72.8 billion. How do you think he’s enjoying adding robots instead of new jobs?
This brings us back, full circle to your argument:
Employment is growing, month after month after month. But wage growth is abysmal. So is productivity growth: not surprising in economies where there are lots of people on the job working for low pay.
This is because of automation. Because of automation, Amazon can expand its fulfillment centers, because having their own fulfillment centers represents a savings over using third-party centers. While Amazon added a whopping 110,000 jobs in 2016, largely to staff these fulfillment centers, it only did so because technology allowed Amazon’s efficiency in running these centers to increase to the point that it was economically feasible for them to do so. These jobs did not come out of the ether; they represent jobs that other people in other centers in the United States and in other countries had, and they represent jobs where people are getting paid about $12 to $14 an hour.
Amazon did not increase global productivity by some amazing margin by making the switch to automated facilities. It narrowly edged out its previous fulfillment practices, added employees to its roster, and obliterated jobs in other companies. Given the 20% increase in efficiency that the robots have created, it likely created about 83% as many jobs as it destroyed or, at least, figured out a way to pay 83% as much to ship the same amount of goods.
If you remain unconvinced, these pinsetters salute you in your obstinacy.