Automation has ever been the bane of the working classes. It seems today that the threat to jobs from that quarter is only going to intensify as the robots march higher and further and begin to infiltrate the jobs of services providers and even break into the professions. Colin Teese writes.
Book details
THE RISE OF THE ROBOTS: Technology and the Threat of a Jobless Future
by Martin Ford
(Oneworld, London)
Hardcover: 352 pages
ISBN: 9781780747491
Price: AUD$29.99
Automation has ever been the bane of the working classes. It seems today that the threat to jobs from that quarter is only going to intensify as the robots march higher and further and begin to infiltrate the jobs of services providers and even break into the professions. Colin Teese writes.
Martin Ford is the founder of a Silicon Valley software development firm and, apparently, is the first writer with the appropriate skills background to raise the issue of technology-led unemployment.
Lord Skidelsky, best known for his most authoritative three-volume biography of John Maynard Keynes, is among those who have praised the book.
Ford confronts us with the unpalatable prospect that technological changes threaten us with mass unemployment. As a result, the market economies, the key to maintaining jobs growth in capitalist economies, are in danger of collapsing for want of the demand wage earners pump into the economy. The cost benefits robots generate won’t be much help if we have no paying customers to buy the output.
Towards the end of the book, Ford quotes recent research from the United States Bureau of Labor Statistics. Rather than count jobs, the bureau decided to research hours worked.
The bureau found the following: “In 1998 workers in the US business sector put in 194 billion hours of labour. A decade and a half later, in 2013, the value of goods and services produced by American businesses had grown $3.5 trillion after adjusting for inflation – a 42 per cent increase in output. The total amount of human labour required to accomplish that was … 194 billion hours.”
In other words, a 42 per cent increase in output with no growth in hours worked. Meanwhile the population of the US increased by 40 million, thus feeding more labour into the workforce.
One might conclude that the US has done well in the productivity stakes, but badly on job creation and wage growth. The evidence certainly seems to support the view that technology advances carry with them the threat of mass unemployment. Ford’s purpose is to examine how this will impact on economic and social life, and what political leaders may have to do to manage the inevitable advances in technology.
By way of example, the author tells us that early robots were introduced into the activities of what we in Australia would once have called “storemen and packers”. The human brain could be trained so that such a worker could sort boxes of various shapes, sizes and colours into whatever order he was required to achieve. An early robot could, with difficulty, match the capability of a trained human. However, a more advanced robot has been developed that will be capable of completing the same tasks up to six times faster than a trained human worker.
Into the third dimension
The advance in technology behind this brings to robotics a newfound capacity to combine visual perception, spatial computation and dexterity. By doing so, machine automation will have the capacity to invade further and deeper into areas of manual, routine jobs previously needing human labour.
Tesla’s plant in California uses 160 robots to build 400 electric cars a week. These robots are programmed to perform several separate and different functions and to retool as needed to carry out their various functions. They are fast, precise and strong. While these robots have machine vision capability, they are all limited to two dimensions, and cannot handle unpredictability.
These limitations will presumably be engineered out of future robots. These will have the capacity to see in three dimensions and cope with problems arising from uncertainty. In this way, even more opportunities will be available for robots to take over more skilled occupations from human labour.
These advances, of course, represent nothing more than the steady forward march of labour-saving mechanisation in the production process since the early part of the 20th century.
Henry Ford pioneered the idea of a mechanised assembly line for car production. Incidentally, he was the first capitalist to recognise that while better production techniques rewarded capitalists with larger profits, for these to be sustainable they needed to be translated into heavier wage packets for workers. One worker’s spending was another worker’s wage.
Martin Ford concentrates on technological change from the beginning of the computer age. He is a computer “nerd” himself. When he tells us where he thinks the robot age is likely to take us in the years ahead, we should take notice.
And, it is not only a problem for the developed economies; low-wage countries will also suffer. What he calls factory “reshoring” is already happening and We should anticipate more. He quotes the case of a textile mill in South Carolina. In 1980 it employed 2,000 workers. Today the plant is producing the same output with 140 workers. Obviously, its labour costs are less of a problem.
All of which means that some of the 1.2 million jobs that went offshore from the United States in the 1990s (three-quarters of these were in textiles) are coming back. So are exports: from 2009 to 2012 textile exports increased by 37 per cent to $US23 billion.
Reshoring is not only happening in the U.S. and Europe. Even China, where labour costs are rising, is turning to robots.
Emerging economies that relied on cheap labour will be hard hit.
Robotic changes are also biting into services jobs, where the vast majority of workers are now employed. One robot that is being developed will be capable of fully automating hamburger production. At the moment the wage bill for workers making hamburgers is about $US9 billion annually. Martin Ford believes that perhaps 50 per cent of fast-food workers could lose their jobs to robots. Other sectors, especially retail, are similarly threatened.
Robots have also made an impact on wealth distribution and worker compensation. From 1950 to 1975, growth in real hourly compensation for production and non-supervisory workers in the U.S. tracked productivity advances. From 1975 to 2010, they began to diverge; by 2010 productivity had risen by 250 per cent; meanwhile, labour compensation lagged behind at 113 per cent. In the last 55 years capital has got twice as much of the reward from productivity gains as labour.
White-collar jobs are not immune from the march of robotics. Within 15 years news reports will be written in most of the areas now covered by journalists. Health care is another area ripe for robotics – especially in diagnostics.
Ford is no economist, but it troubles him that the economics profession, while welcoming the cost-saving benefits of robotics, seems unwilling to recognise that these will bring will mass unemployment.
U.S. President Barack Obama is under no illusion. He points out that the economy has to create tens of thousands of jobs every month just to cover the new workers coming into the workforce. This won’t make any dent on the numbers currently unemployed. While acknowledging that conventional wisdom that more machines are throwing workers out of employment, his solution is based on the orthodox view that better education and job training is the best solution.
This solution ignores the fact that education and training won’t help workers find jobs that don’t exist. Neither does higher education help. In the U.S., graduating students far exceed the available managerial-type jobs.
Neither the cause nor the solution to these problems can be loaded onto business; businesses are in competition for sales and must adopt whatever technological advances help them to stay in business. For them labour will always be a cost. It is not their responsibility to provide employment opportunities – despite what governments prefer to believe. Ultimately this must be an obligation of government.
Worker = consumer
All of the developed West, and much of the rest of the world, is operating or aspires to operate market-based economies. These are, however, unable to function without consumer spending. This, in turn, requires that consumers enjoy incomes or other sources of wealth sufficient to purchase the output of the economy. If output can be produced with only minimal use of labour, then the market economy can’t function.
The recent global financial crisis made that clear. As workers’ incomes declined before 2007, consumption spending was maintained by borrowing. But that can only work for a limited time; sooner or later borrowings have to be paid back; and then spending contracts.
Martin Ford advances the idea of income support for workers to keep alive the market economy. He argues, to my mind unconvincingly, that conservative economist F.A. Hayek advocated just this.
Hayek advocated income support, not as a matter of policy, but only to deal with welfare circumstances. Hayek could not have anticipated that robots would threaten market economies with mass unemployment.
Martin Ford’s idea that workers must be provided with purchasing power found favour with Milton Friedman, another conservative economist of more recent vintage. Friedman, like Hayek, supported the idea in cases where market operation forced wages down to the point where they could not sustain a worker.
What both these economists understood was that for a market economy to survive, consumers without a supporting wage income will have to be provided by some other means with spending power.
Ford is to be commended for putting before us the problem robots create for our system; he has also advanced that income support might be the only practical solution. The ball, then, is back in the court of political leaders.
Unfortunately, for the moment, no government would dare advocate, let alone adopt, what needs to be done. The question then becomes; how long can the inevitable be postponed?
