Dean Barber

This Time It is Different

In Uncategorized on May 5, 2013 at 7:16 am

While he never came out and actually said it, the gentleman was in essence calling me a Luddite.

Now I have been called a lot worse, and while he did make some valid and reasonable arguments in response to my blog last week, I reject the charge that I am afraid of technology, even if I have yet to figure out how to program my big screen HD TV to do stuff that I probably don’t need it to do.

The Luddites, by the way, were a threatened bunch of textile artisans in 19th century Britain. They took to bashing the automated looms that they perceived (correctly) were taking their jobs. A few hangings here and there stopped their vandalism.

Now I am not about to start bashing any computers, robots or even software engineers. I am peaceful man who shuns violence. If there is any group, however, that is deserving of persecution, it would be editors for their boneheaded views on just about any subject. Let us hope that robots do take their jobs.

But before I get into the meat of the subject, which is how this new machine age of digital technology has created both winners and losers in terms of our economic future, let me say that the purpose of this blog is not to necessarily garner your support and agreement for my views, although those of you who do will go onto the bonus round.

No, the purpose is to simply get you to think, which is beyond on the scope of computers and, of course, most editors.

A Faster, Stranger New World

One could rightly argue that as long as man has been shuffling about upright, we have been entering a strange new world when it comes to advancing technology. But things are a whole lot faster now. Today’s Playstation is more powerful than yesterday’s military supercomputer.

It’s an age of increasing productivity but fewer jobs. Since 2001, U.S. gross domestic product has risen 20 percent, while the number of jobs have increased by only 1.9 percent.

Wages, too, have taken a hit. Adjusted for inflation, the average U.S. household now has lower income than it did in 1997. Wages as a share of GDP are now near an all-time low at a point in history when corporate profits are near or at an all-time high. 

Now most economists used to believe that if you just keep increasing productivity, everything else kind of takes care of itself. But as Erik Brynjolfsoon and Andrew McAfee point out in their book “Race Against the Machine,” there’s no economic law that says everyone has to benefit equally from increased productivity.

It’s entirely possible that some people benefit a lot more than others, which is what has been happening for about the past 15 years or so. The pie has gotten bigger courtesy of productivity, but most of the increase in income has gone to less than 1 percent of the population. I have to believe that this was a root cause for the Occupy Wall Street movement that we saw sprout up in 2011. Their slogan: “We are the 99 percent.”

The Great Decoupling

According to McAfee and Brynjolfsoon, there has been this “great decoupling” between productivity growth and employment growth. Economist Jared Bernstein calls the gap that’s opened up “the jaws of the snake.” It shows no sign of closing.

Now one could probably argue that our laws, regulations and government tax policy played a large part in creating this gulf that exists, and I won’t argue that point.  But I believe, as Brynjolfsoon and Andrew assert, that digital technology is the primary mover and cause. For what it’s worth, these two fellas work at a little community tech school that you may have heard of called MIT.

Technology has always been creating and destroying jobs. Automatic threshers replaced 30 percent of labor force in agriculture in the 19th century. But it happened over a long period of time, and people could find new kinds of work to do.

But this time it is different. Digital technology, which allows you can reproduce things at close to zero marginal cost with perfect quality and almost instant delivery, is affecting virtually every industry.

Consider the person who writes software. You can take that software and replicate it a million times. And while the person who created it does very well, the people who previously did that job are less important or maybe not even necessary. TurboTax is an example. You’ve got a human tax preparer being replaced by a $39 piece of software.

Service Jobs Take a Hit

Sophisticated scheduling software has eliminated the need for many office assistants and secretaries. Labor Department statistics show a loss of 1.1 million such jobs in the decade between 2000 and 2010. The number of bookkeepers fell 26 percent, word processors and typists, 63 percent; travel agents, 46 percent; and telephone operators, 64 percent.

Online banking services have wiped out many teller jobs; self-service checkout lanes have whittled away at cashier jobs. Utilities have installed smart meters that eliminate the need for meter readers .

These are what McAfee calls the routine cognitive workers, and they are taking hits big time. No sector is spared or will be spared.  The idea that automation has been a job killer solely in manufacturing is simply wrong. Just wait until the day comes when some high-paying professions start seeing job erosion because of digital technology. When doctors and lawyers start getting displaced, you will hear the howls.

I happen to believe that we are still only in the infant stages of robotics in manufacturing. In a PowerPoint presentation/speech that I am currently working on for LiveXchange to be held later this month, I will talk about Baxter, a new creation by Rethink Robotics.

Baxter learns new tasks by observing human performance, usually within 10 minutes. No in-depth reprogramming is required. And “he” costs just $22,000, less than half the price of other industrial robots.

Just What Will We Do?

If an army of future Baxters or his descendants are coming, and I think they are, then I can conjure up a question that may sound a bit outlandish and absurd to some of you, but I think it deserves some consideration.  If machines, which have yet to exceed humans in intelligence but are getting intelligent enough to have a major impact on the job market,  become capable of doing most of the work, just what will we do?

I know that I would like to keep working.

The economist John Maynard Keynes addressed this issue in 1930, when he wrote, “The increase of technical efficiency has been taking place faster than we can deal with the problem of labour absorption.” Keynes imagined 2030 as a time in which most people worked only 15 hours a week, and would occupy themselves mostly with leisure activities.

Moshe Vardi, a professor of computer science at Rice University, writes for The Atlantic magazine that he doesn’t look forward to that kind of future.

“I do not find this to be a promising future. First, if machines can do almost all of our work, then it is not clear that even 15 weekly hours of work will be required. Second, I do not find the prospect of leisure-filled life appealing. I believe that work is essential to human well-being. Third, our economic system would have to undergo a radical restructuring to enable billions of people to live lives of leisure.”

Should We Go Down Every Rabbit Hole?

So this poses another question. Should we ever relinquish or at least consider not to pursue a certain technology on the basis that it could somehow come back to haunt us? Historians debate whether the development and use of the atomic bomb during World War II may have saved more lives that it took. The alternative was a land invasion of Japan, where the casualties could have been much higher.

But is the world safer today with Pakistan having the bomb and with Iran and North Korea having inspirations of developing nuclear weapons? And the nightmare of nightmares is a terrorist group somehow getting their hands on such a device.

In the end, did the pursuit of that particular technology serve us well? More importantly, should we go down every rabbit hole that presents itself? Frankly, I do not have an answer for that one. I’m not sure you can cap it in the long run.

Maybe the ages will tell us, but maybe well after we are gone.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm in Plano, Texas —http://www.barberadvisors.com He can be reached at 972-767-9518 or at dbarber@barberadvisors.com

If you work for a company seeking site selection consulting or an economic development organization in need of counsel, ask for our separate brochures (pdfs) outlining how we can help. All requests for information will be considered confidential.

© Unauthorized use of this blog is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Dean Barber and Barberbiz with specific direction to the original content.

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  1. A future without work is hard to imagine. Our current economic model doesn’t support it. However, I can’t see how we avoid this. Is the answer to start working on technologies that improve human performance or is it to radically change our economic model? If so then when and how?

  2. It sounds like the human race will have to embrace the creative arts in a much bigger fashion. Writing, painting, producing music, plays, films… this is not “work” for most of us who would like nothing better than to engage full time in such endeavors. Pay me a monthly stipend to do what I really want to do and sign me up for this brave new future where the machines do all the difficult or boring tasks… just be sure that medical coverage is included.

  3. The numbers escape me, but I recall reading about the impact that technology had on employment in the lumber industry. It’s not hard to imagine what the development of the chain saw did to the very labor intensive process of cutting down large Douglas Fir trees in the Pacific Northwest. The industry went from measuring labor in people/tree to trees/person. Technology is definitely a double edged sword. I’m an optimist, and I think that we will find our way through this, ensure that technology is our servant and not our master, and save ourselves from the specter of the 15 hour week.

  4. “Adjusted for inflation, the average U.S. household now has lower income than it did in 1997. Wages as a share of GDP are now near an all-time low at a point in history when corporate profits are near or at an all-time high… The pie has gotten bigger courtesy of productivity, but most of the increase in income has gone to less than one percent of the population.” I’m a conservative by nature but I continue to be troubled by this notion. I find myself seeking a counterpoint, but also reconsidering some basic conservative tenets. Thanks for the provocation Dean.

  5. I really enjoy your thought-provoking essays– thanks so much for sharing!

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