Duc Tran, an automation engineer, observes the fully autonomous robotic truck loader during a test at the Wynright Robotics facility in Arlington, Texas, July 18, 2012. (Photo: Brandon Thibodeaux / The New York Times)
September 17 changed everything.
On that day in 2013, Oxford University published an innocuously titled academic paper by two mostly unknown economists. But "
The Future of Employment" wasn't just another number-crunching exercise in opacity by a couple of dreary scientists. No, their bombshell report portended a coming robot apocalypse that could change the nature of human civilization, and perhaps even human beings themselves.
They foresaw a future with the likes of
Gordon, the "first robotic barista in the U.S." Gordon can serve "about 120 coffees in an hour." They also predicted the likes of
Otto, the self-driving big-rig designated by Uber to deliver truckloads of beer to thirsty consumers. And then there's
Pepper, the
empathic, "day-to-day"
companionthat is not just working in
airports and
banks, but being "
adopted" into Japanese homes … and even "
enrolling" in school.
The Future Is Now
This is the "next economy," and, ready or not, it is coming at the double-time speed of
Moore's Law. This rapid acceleration of the
Fourth Industrial Revolution is transforming "
The Future of Employment's" apocalyptic premonition -- that 47 percent of all jobs in the United States may be lost to automation over the next two decades -- into a solemn epitaph for the rapidly fading era of manufacturing-based, consumption-driven economics.
Dire warnings have come from
Bill Gates,
Stephen Hawking,
Elon Musk and, most dauntingly, from cybersecurity experts who
recently warned of the threat of hacked robots violently turning against people and their pets in a souped-up scenario reminiscent of
The Purge. However, long before a haywire Roomba or a disgruntled Pepper comes calling, millions of workers will struggle to fend off the brutal reality of unplanned obsolescence.
This is an economy where there's "an 83% chance that workers who earn $20 an hour or less could have their jobs replaced by robots in the next five years" and "those in the $40 an hour pay range face a 31% chance of having their jobs taken over by the machines," according to a 2016
report by then-President Obama's White House.
And it's not coincidental that this robot apocalypse comes at the very moment the epic economic growth we've enjoyed throughout the post-World War II era seems to be coming to an end. Peak demand in oil and "peak stuff" for consumer products may signal more than just growing energy efficiency and market saturation for cheap stuff. This may signal the spread of
Japan-style economic stagnation around the developed world. This could be the end of the
ecologically untenable assumption of limitless growth.
The End of the American Century
The post-war idea of never-ending growth emerged from the manufacturing boom that came with the "American Century." Perpetual government investment in the military-industrial complex created a baseline of well-paying, low and high-skilled jobs that helped raise the floor -- and consumer expectations -- for workers, while also sustaining huge corporations like Boeing, Westinghouse and General Electric. Military Keynesian was a reliable tide that lifted a lot of boats moored to an American dream of endless economic expansion. Sadly, it also conjured up a series of costly, nightmarish wars for those who paid the ultimate price both at home and abroad.
An often overlooked element, though, is the way automation helped maintain continued growth in productivity, even as wages lagged. As the Guardian
recently noted, "As of 2015, a typical production worker in the US earned about 9% less than a comparable worker in 1973. Over the same 42 years, the American economy grew by more than 200%, or a staggering $11tn." This divergence between wages and productivity drove wealth inequality. But it also presented a problem for producers facing the declining purchasing power of their customers -- a.k.a. the workers not getting the wages they needed to drive, or at least sustain, continued growth in consumption.
To keep up, the manufacturing economy needed 1) a
massive flood of consumer credit to create artificial purchasing power; 2) ever-lower prices on ever-more mass-produced goods so wage-stagnant workers could
afford to consume the way they did when one good job per family made for a middle-class life.
To get there, jobs went to places like China. But one of the underappreciated drivers of this move to cheap labor was the coming of automation, which made American humans a far less efficient way to make things. BuzzFeed
reported on a recent study by the National Bureau of Economic Research, which found that since 1990, each new robot installed in an American factory "reduced employment in the surrounding area by 6.2 workers." The only thing cheaper than replacing American humans with better technology was exploiting cheap labor markets in China and the developing world. But that's no longer true.
To wit, Oxford paired with Citibank in 2015 to
produce a fuller picture of the global threat to jobs. In "
Technology at Work," researchers found that 75 percent of the world's robots are "geographically concentrated" in just five countries -- "China, Germany, Japan, Korea, and the US." Of those, China is by far "the fastest growing market" with the "most significant room for future growth." In fact, they determined that "on average 57% of jobs are susceptible to automation," but the "number rises to 69% in India and 77% in China."
As if on cue, China's new "
five-year plan" to be a global leader in robotics has already produced
results. China
leads the world in production of industrial robots, and robots are becoming a cheaper, more productive
option to Chinese labor. That's the simple, 21st-century reality undermining the hollow promise to "Make America Great Again" by bringing back jobs from China. It's a great plan for growth … if you've got a time machine big enough for 320 million people.
Perhaps most tellingly, artificial intelligence is starting to lay waste to college-educated workers in non-manual jobs previously thought to be exempt from automation. Here are just some of white-collar casualties of the robot apocalypse:
*
Goldman Sachs "employs" Marcus -- a fully automated lending platform that's part of an industry-wide AI-makeover displacing humans in equities "sales, trading, and research."
*
Fukoku Mutual Life Insurance is turning over policy payouts to IBM's Watson Supercomputer, which has 6,000 corporate clients ranging from Hilton Hotels to Whirlpool and Visa.
* Coca-Cola's global senior digital director plans on using AI bots to crank out ads with "automated narratives" and AI is already
creating commercial music and jingles.
* Jeff Bezos-owned Washington Post used
Heliograf to pump out stories about the
2016 Rio Olympics before tweaking it to "cover" the 2016 Election campaign.
* The Smart Tissue Autonomous Robot (STAR) recently "
outperformed" a human surgeon in a test of skill. This breakthrough augurs a near-future world where robots assist and perform a
variety of surgical procedures.
Just like elsewhere, medical robots will ultimately prove they can do the job quickly, efficiently and without human burnout. The high price of doctors will be weighed against robots that perform thousands of surgeries without complaint or error, particularly since "self-taught" AI already outperforms humans in predicting
heart attacks and matches them in diagnosing
skin cancer. Like it is doing in manufacturing, this could mean a wholesale revolution in health care that lowers costs and increases access to highly specialized care. It's that level of relentless, Terminator-like efficiency that is disrupting the existing economic model of everything from
retail and
restaurants, to
education and
warfare.
What's Next?
The
Fourth Industrial Revolution may be an era of human obsolescence for which the
previous three Industrial Revolutions may not be a guide. That's because artificially created,
human-modeled deep learning neural networks already generate cognitive processes so complex that even the scientists who created those networks cannot determine how, for instance, an
autodidactic self-driving car makes the decisions it does when driving itself around New Jersey. In other words, we're not talking about industrial looms, steam engines or punch-cards. We're talking about cheaper, efficient, tireless and infinitely upgradeable workers that (
or who?) are ready to take on nearly every human endeavor.
That's why tech leaders increasingly talk about the "
New Collar" economy, where human beings not only work with intelligent machines, but also begin physically
merging with machines in an effort to keep pace. While some see this
coming singularity as a metaphysical event horizon for human consciousness, Elon Musk sees it as the
only way we'll will be able to keep up with what is, in effect, a whole new class of forced labor … and he's got the
start-up to prove it.
Sadly, forced labor may be the economic model most applicable to the next economy. As more and more jobs are turned over to AI, robots and algorithms, more and more wealth will accumulate in the hands of those already at the top of a steep pyramid. Like the pharaohs of old, these masters of the universe will profit as the cost of labor declines precipitously thanks to the robots they "employ."
As MIT Technology Review recently
pointed out, this will generate windfalls for firms like Goldman Sachs where "pay of the average managing director … will probably get even bigger, as there are fewer lower-level people to share the profits with." Since they are in the business of leveraging money to make more money, they can thrive -- at least for a while -- in the whiz-bang, highly financialized world of high-speed, algorithmic market trades.
But it will also be an era when inequality hits not only human beings, but also
companies. The tech world is filled with hi-tech unicorns like Uber that gallop to higher and higher valuation with just a fraction of the workforce (
6,700) supported by Ford (
201,000), Hertz (
30,000) or one of the nation's leading trucking firms (
18,000). Successful companies with the fewest employees and the most robots will complete the long process of "de-industrialization" often blamed on globalization. On the surface, outsourcing and offshoring look like the main disruptive forces opening up the income and wealth gaps. But they're really just the logical outcome of driving growth through increased productivity, instead of driving growth (and consumption) through increased wages and broader employment. Robots are simply the cheapest, most efficient and most productive phase of all.
However, the next economy doesn't have to be a doomsday scenario. It could be a sustainable economy where technology drives a stake into the heart of the
hydrocarbons, drives down the cost on
heath care and
expands banking to underserved communities. The next economy could also see the "gig economy" transition to open-source, peer-to-peer, micro-entrepreneurial and
microgrid-powered networks that eliminate economic middlemen. And the "
Maker Movement" could inspire a "curated economy" of artisans, urban farmers and hyperlocal bartering that runs parallel to the robot-run, mass-produced economy. These human-made goods and services may be worth far more in a world where every mass-produced need is only a click and a hovering Amazon blimp away.
As our needs are increasingly met by hyper-efficient, AI-driven systems, the only acquisition that will truly matter is knowledge. And knowledge must become more than just a "means" to the end of getting that coveted or expected job out of high school or college -- because the means of production will no longer require human hands, human sweat or human tears. Perhaps that's why
Alibaba's Jack Ma not only
lamented a coming world of "pain" as the tech-driven economic disruption lays waste to the global economy,
but also said education must be reformed to "raise children to be more creative and curious or they will be ill-prepared for the future." It's a future where knowledge -- and the creativity it sparks -- may have to be an end unto itself.
And while Musk is plotting for the day when
augmented humans rise up to stop his vision of a Terminator-filled future, the true test will be how we as a society choose to manage -- or whether we simply continue to ignore -- the widening pain of displacement as we move from this economy to the next one. Either way, it's not only coming … it's already here.
