Had a discussion with an economist the other day, who held to the conventional wisdom, justified by history, that the ‘creative destruction’ of whole sectors of jobs due to industrialization and technology (agriculture is a favourite example) will result in the creation of many more jobs in new sectors never previously imagined or possible. It just takes a little time, and pain, to adjust.
There is much anticipation that the next wave of automation will encroach on white-collar sectors previously thought to be unaffected, but now a target thanks to artificial intelligence. (Will that include economists?) And whether new service sectors will emerge to provide new jobs that are sufficiently well paying to maintain a healthy economy and a stable society.
Or rather, will automation accelerate the concentration of wealth even as it increases productivity but lowers wages? Does it matter that people would have less income if goods and services provided by automation were commensurately cheaper? Do we finally achieve a leisurely nirvana or will the loss of purpose and social status provided by work create a dysfunctional, unstable polity?
Will leader (or rulers) then create employment (and purpose) by recruiting vast numbers of otherwise lower-skilled men (in particular) into military and security forces whose primary job is to ensure control over otherwise disruptive and displaced workers?
Or is the economist right? Similar worries of the past proved unfounded as the limitless demands of human beings and technology created new opportunities. On the other hand, Bank of England’s Chief Economist Andy Haldane has argued that the Luddites (the English textile workers who smashed industrial machinery early in the 19th century) “had a point after all.” The transition can be ugly. (More here.)
Anyway … here’s another piece in the New York Times that looks at recent data to explore whether this next phase of automation in manufacturing is qualitatively different, the consequences of which may mean more disruption in our disruptive times.
Who is winning the race for jobs between robots and humans? Last year, two leading economists described a future in which humans come out ahead. But now they’ve declared a different winner: the robots.
The industry most affected by automation is manufacturing. For every robot per thousand workers, up to six workers lost their jobs and wages fell by as much as three-fourths of a percent, according to a new paper by the economists, Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University. It appears to be the first study to quantify large, direct, negative effects of robots.
The paper is all the more significant because the researchers, whose work is highly regarded in their field, had been more sanguine about the effect of technology on jobs. In a paper last year, they said it was likely that increased automation would create new, better jobs, so employment and wages would eventually return to their previous levels. Just as cranes replaced dockworkers but created related jobs for engineers and financiers, the theory goes, new technology has created new jobs for software developers and data analysts.
But that paper was a conceptual exercise. The new one uses real-world data — and suggests a more pessimistic future. The researchers said they were surprised to see very little employment increase in other occupations to offset the job losses in manufacturing. That increase could still happen, they said, but for now there are large numbers of people out of work, with no clear path forward — especially blue-collar men without college degreed.
The conclusion is that even if overall employment and wages recover, there will be losers in the process, and it’s going to take a very long time for these communities to recover,” Mr. Acemoglu said. …
The paper also helps explain a mystery that has been puzzling economists: why, if machines are replacing human workers, productivity hasn’t been increasing. In manufacturing, productivity has been increasing more than elsewhere — and now we see evidence of it in the employment data, too.
The study analyzed the effect of industrial robots in local labor markets in the United States. Robots are to blame for up to 670,000 lost manufacturing jobs between 1990 and 2007, it concluded, and that number will rise because industrial robots are expected to quadruple.
The paper adds to the evidence that automation, more than other factors like trade and offshoring that President Trump campaigned on, has been the bigger long-term threat to blue-collar jobs. The researchers said the findings — “large and robust negative effects of robots on employment and wages” — remained strong even after controlling for imports, offshoring, software that displaces jobs, worker demographics and the type of industry. …
The next question is whether the coming wave of technologies — like machine learning, drones and driverless cars — will have similar effects, but on many more people.
The segment of employment I think more worth watching is … driving. Truckers in some US states constitute the most common employment category.
In Canada, I’ve heard it estimated that 130,000 (largely) men could be displaced by automated trucking alone. (In The Netherlands, for instance, autonomous trucking is already here in Rotterdam ports and will likely extend to intercity controlled-access freeways more easily automated than complex urban environments.)
Then there are transit drivers, taxi and Uber drivers, delivery drivers …
Imagine the social and political consequences of de-employing tens of thousands of low-skilled labourers in a short time, without the ability to reabsorb them in jobs of similar pay and status. The temptation to issue them guns and allow them discretionary power to maintain social order (or, let’s say, undocumented immigrants and closing borders) will be high unless the political system can respond in more productive ways.