Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford
The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson and Andrew McAfee
“Those jobs are going, and they ain’t coming back,” from My Hometown by Bruce Springsteen.
A recent Upshot piece in The New York Times entitled “The Geography of Trumpism” compared hundreds of demographic and economic variables culled from census data in an effort to understand the source of “The Donald’s” political support. The analysis found that the counties most likely to support the real estate mogul “are places where white identity mixes with long-simmering economic dysfunctions.” While his voters come from North and South, liberal, conservative, rural, and urban communities, “[w]hat they have in common is that they largely missed the generation-long transition of the United States from manufacturing and into a diverse, information-driven economy deeply intertwined with the rest of the world.” But, that only goes so far in explaining Trump’s support given that upheavals in labor markets have been built into the industrial evolution since the beginning.
In recurrent cycles, each inaugurated by the introduction of new technologies and products, there has been a concomitant fear that productivity-enhancing methods would make significant numbers of workers redundant, resulting in widespread unemployment on the one hand, and a decline in average wages for those fortunate enough to have a job on the other. And periodically, there have been voices calling attention to these possibilities.
For example, in his 1930 essay “Economic Possibilities for our Grandchildren,” John Maynard Keynes warned about the prospect of widespread technological unemployment “due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.”
In August 1949, Norbert Wiener, a distinguished professor of mathematics at MIT (Massachusetts Institute of Technology) and a pioneer in the field of cybernetics wrote a letter to Walter Reuther, the president of the United Autoworkers Union (UAW), to warn him that the application of modern computing machines, then only in their infancy, to the assembly line, would result in disastrous unemployment within a decade or two. Wiener argued that this was inevitable and he sounded this alarm so that the UAW could help its members prepare for this eventuality. Wiener even proposed a solution: the UAW should take ownership of the technology for robots and thereby benefit from the very means that would displace its members.
Less than two decades later, in March 1964, a group of intellectuals and activists, which included the economists Robert Theobald, Robert Heilbroner, and eventual Nobel laureate Gunnar Myrdal, as well as Nobel chemist Linus Pauling and civil rights activist Bayard Rustin, sent a memorandum, “The Triple Revolution,” to President Lyndon Johnson. Along with revolutions in weaponry and human rights, the statement identified a “cybernetics” revolution as a threat to the stability of modern economies. More specifically, they warned that automatic machines would result in a “system of almost unlimited industrial capacity” and, correspondingly, would drastically reduce the labor needs of the economy resulting in a significant increase in structural unemployment.
Though US manufacturing employment as a percentage of the labor force peaked in 1943 and in absolute numbers in 1979, and has been declining ever since, neither Keynes nor Wiener’s fears or those of the Ad Hoc Committee materialized, at least in the time frame imagined. The combination of government intervention through fiscal and monetary policy, as well as the growth of the service economy, led to an increase, rather than a decrease, in employment.
The possibility that the world and national economies cannot create sufficient employment in large enough numbers to support all those who must work has not drawn sustained attention since the 1960s – until lately. It is fear of unemployment that drives politicians in the OECD nations, as well as emerging economies such as China, India, and Brazil, to enact polices to stimulate material growth as an alternative to distributing the benefits of technology more equitably. We also see the consequences in democratic societies when the economy does not deliver on the expectations of its members in the rise of ‘Trumpism’ in the US. In parallel with these fears, a diverse set of academics is making the case that this time, we really should be worried about the impact of technology on our employment prospects.
One such author is Martin Ford, a computer engineer, entrepreneur, and author of Rise of the Robots: Technology and the Threat of a Jobless Future. Ford foresees an explosion in the application of robots in the economy with dire consequences for employment, “driven by the relentless acceleration in computer technology.” This will result in “a fundamental shift in the relationship between workers and machines” and “challenge one of our most basic assumptions about technology: that machines are tools that increase the productivity of workers. Instead, machines themselves are turning into workers, and the line between the capability of labor and capital is blurring as never before.”
Anticipating the inevitable response that we have been here before and the economy was more than capable of absorbing displaced workers in new industries, Ford argues that the past century was an economic “Goldilocks” period that has now come to an end. In support of this, he cites the fact that in the first decade of the 21st century the US economy created zero net new jobs, something that had not happened since the Great Depression of the 1930s and that contrasts strongly with every other decade since the end of World War II in which job growth exceeded 20 percent.
He also challenges the assumption that the dislocation will be limited to workers with little education and lower-skill levels. As he puts it: “While lower-skill occupations will no doubt continue to be affected, a great many college-educated, white-collar occupations are going to discover that their jobs, too, are squarely in the sights as software automation and predictive algorithms advance rapidly in capability.” He concludes that the usual response to such disruption, the acquisition of more education and skills “will not necessarily offer effective protection against job automation in the future.”
As an example, he cites radiologists, “medical doctors who specialize in the interpretation of medical images.” With advances in the ability of computers to analyze images, it is entirely possible to envision that radiology in the near future will be performed by machines. In separate chapters, he details the kinds and extent of disruption that will transform higher education on the one hand, and health care on the other.
In further support of his claim that “this time is different,” Ford cites seven trends: stagnant wages; a decline in the percent of the economy going to labor with a corresponding great return to corporations; a decline in the labor force participation rate; soaring inequality; polarization and the increase in part-time jobs; and, declining incomes and underemployment of college graduates.
The last chapter of his book is entitled “Toward a New Economic Paradigm,” but it is not especially new. It is informed by an insight that goes back to John Maynard Keynes: if most people must have a job in order to earn income and they are replaced by machines, then there will not be enough demand for the products made by those machines. This will result in a decrease in production, more unemployment, even less demand in the economy, and a vicious circle is created.
Keynes’ magnum opus, The General Theory of Employment, Interest and Money, was written to deal with this eventuality. Its underlying idea was for government to get money into the hands of people by just about any means possible. One such way is to build public works, but so is hiring people to put bank notes in bottles and burying them and then having other people dig them up.
Ford’s preferred way to put money into people’s hands is via expansion of social insurance in the form of a basic income guarantee. This is an idea that can be traced back to the libertarian economist Friedrich Hayek, proposed in his three-volume work Law, Legislation and Liberty, published between 1973 and 1979. There, Hayek wrote:
The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself, appear not only to be a wholly legitimate protection against a risk common to all, but a necessary part of the Great Society in which the individual no longer has specific claims on the members of the particular small group into which he was born.
Even though Hayek is an icon of the right wing there would be fierce resistance to any proposal for a basic income guarantee; Ford nonetheless says that “the conservative argument for a basic income centers on the fact that it provides a safety net coupled with individual freedom of choice. Rather than having government intrude into personal economic decisions, or get into the business of directly providing products and services, the idea is to give everyone the means to go out and participate in the market.”
Ford is particular about the way in which a basic income guarantee should be enacted. As he puts it, “The most important factor in designing a workable guaranteed income scheme is getting the incentives right. The objective should be to provide a universal safety net as well as a supplement to low incomes—but, without creating a disincentive to work and to be as productive as possible. The income provided should be relatively minimal: enough to get by, but not enough to be especially comfortable.” He discusses but does not come down on either side between the alternative of an unconditional basic income paid to all adults on the one hand and a means tested guaranteed minimum income such as a negative income tax paid only to those at the bottom of the income distribution, on the other. Ford would also support and encourage education, if only because “we all benefit when the people around us are more educated, but also because a better educated population will be positioned to more constructively use their leisure time.”
Erik Brynjolfsson and Andrew McAfee are professors at MIT’s Sloan School of Management, co-directors of the MIT Initiative on the Digital Economy, and co-authors of The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. They have a very similar prospective on the implications for work and employment to Ford’s, but offer a more comprehensive set of responses. In particular, they are more sensitive to the role that work plays in people’s lives. It is encapsulated in this quote from Voltaire: “Work saves a man from three great evils: boredom, vice, and need.” As they put it, “It’s tremendously important for people to work, not just because that’s how they get their money, but also because it’s one of the principal ways they get many other important things: self-worth, community engagement, healthy values, structure, and dignity, to name just a few.”
Like Ford, Brynjolfsson and McAfee advocate revisiting the idea of a basic income guarantee. They come down squarely on the side of a negative income tax because it “combines a guaranteed minimum income with an incentive to work” a concept also supported by the conservative economist Milton Friedman. They also propose measures on taxation, reducing or eliminating taxes on labor (income and payroll taxes), which make the cost of labor more expensive, to be replaced by taxes on pollution as well as a value added tax.
Where they really diverge from Ford is in the advocacy of some “wild ideas,” for example, the creation of a national mutual fund which would distribute capital widely and provide a dividend to all citizens, pay people in non-profits to do socially beneficial work, and several others. As a last resort, it would appear they would have government hire workers to build infrastructure and other public goods.
However, while both of these books do a service by raising the issue of wide scale unemployment in the US (and other advanced economies) they neglect the developing world. New technology will ultimately displace workers in the developing world (manufacturing employment in China is already declining). The consequences for the people of these economies is much more dire since they do not have the accumulated capital, wealth, and income-generating capacity to guarantee citizens a basic income. Also, there is little discussion of whether the planet can really support the increased material production and consumption that is implied by the productivity explosion made possible by digitalization, robotics, and artificial intelligence. Underlying this is an implicit assumption that exponential progress will soon come to energy production and storage, paving a painless way to a renewable and sustainable future.
Finally, neither book reveals any skepticism about the “market,” whether it delivers what people really want and need, and if it operates at a physical scale consistent with the limited capacity of the planet to absorb wastes (pollution). The authors are, instead, so transfixed by what is coming out of labs in Silicon Valley and other technology hubs that they fail to see the ways that people might be employed to help others (and at the same time, themselves) as well as restoring the environment. If, indeed, the future envisioned such as is depicted in these books comes to pass, it is not clear if we would be arriving at Utopia—or its polar opposite.
If we are to avoid an unemployment crisis such as has never been experienced before, then we are going to have to accept that government has a large role to play in directing people to jobs [vocations might be a better word] that improve society as a whole. These may include caring for an aging population, public transit, after school programs for youth, artists and writers in residence programs—the list is endless. Unlike the robots, we are only limited by our imaginations.