WE DON'T HAVE A JOBS CRISIS...:

Difference Engine: Luddite legacy (Babbage, Nov 4th 2011, The Economist)

The conventional explanation for America's current plight is that, at an annualised 2.5% for the most recent quarter (compared with an historical average of 3.3%), the economy is simply not expanding fast enough to put all the people who lost their jobs back to work. Consumer demand, say economists like Dr Tyson, is evidently not there for companies to start hiring again. Clearly, too many chastened Americans are continuing to pay off their debts and save for rainy days, rather than splurging on things they may fancy but can easily manage without.

There is a good deal of truth in that. But it misses a crucial change that economists are loth to accept, though technologists have been concerned about it for several years. This is the disturbing thought that, sluggish business cycles aside, America's current employment woes stem from a precipitous and permanent change caused by not too little technological progress, but too much. The evidence is irrefutable that computerised automation, networks and artificial intelligence (AI)--including machine-learning, language-translation, and speech- and pattern-recognition software--are beginning to render many jobs simply obsolete.

This is unlike the job destruction and creation that has taken place continuously since the beginning of the Industrial Revolution, as machines gradually replaced the muscle-power of human labourers and horses. Today, automation is having an impact not just on routine work, but on cognitive and even creative tasks as well. A tipping point seems to have been reached, at which AI-based automation threatens to supplant the brain-power of large swathes of middle-income employees.

That makes a huge, disruptive difference. Not only is AI software much cheaper than mechanical automation to install and operate, there is a far greater incentive to adopt it--given the significantly higher cost of knowledge workers compared with their blue-collar brothers and sisters in the workshop, on the production line, at the check-out and in the field.

In many ways, the white-collar employees who man the cubicles of business today share the plight of agricultural workers a century ago. In 1900, nearly half of the adult population worked on the land. Thanks to tractors, combine harvesters, crop-picking machines and other forms of mechanisation, agriculture now accounts for little more than 2% of the working population.

Displaced agricultural workers then, though, could migrate from fields to factories and earn higher wages in the process. What is in store for the Dilberts of today? Media theorist Douglas Rushkoff ("Program or Be Programmed" and "Life Inc") would argue "nothing in particular." Put bluntly, few new white-collar jobs, as people know them, are going to be created to replace those now being lost--despite the hopes many place in technology, innovation and better education.

The argument against the Luddite Fallacy rests on two assumptions: one is that machines are tools used by workers to increase their productivity; the other is that the majority of workers are capable of becoming machine operators. What happens when these assumptions cease to apply--when machines are smart enough to become workers? In other words, when capital becomes labour. At that point, the Luddite Fallacy looks rather less fallacious.

This is what Jeremy Rifkin, a social critic, was driving at in his book, "The End of Work", published in 1995. Though not the first to do so, Mr Rifkin argued prophetically that society was entering a new phase--one in which fewer and fewer workers would be needed to produce all the goods and services consumed. "In the years ahead," he wrote, "more sophisticated software technologies are going to bring civilisation ever closer to a near-workerless world."

The process has clearly begun. And it is not just white-collar knowledge workers and middle managers who are being automated out of existence. As data-analytics, business-intelligence and decision-making software do a better and cheaper job, even professionals are not immune to the job-destruction trend now underway. Pattern-recognition technologies are making numerous highly paid skills redundant.

...we have a wealth redistribution crisis.


Posted by oj at November 11, 2011 10:27 PM
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