As a society we are entering uncharted territory

By augustus 31, 2016 Algemeen

Technological innovation is more rapid and broad-based than in any previous industrial revolution, much of it linked to the entrepreneurial dynamism of its denizens. Rapid advances in technology and the liberalization of public policy have shaped a world in which large companies face increasing performance pressure amidst sinking return on assets, intense competition, and changing workforce dynamics. Individuals are taking advantage of lowered barriers to market entry and commercialization to become creators in their own right. As a result, a new economic landscape is beginning to emerge in which a relatively few large, concentrated players will provide infrastructure, platforms, and services that support many fragmented, niche players. Combine increasingly accessible production with digital platforms to organize small creators, and you get a new mode of economic organization.

For individuals and small entities, the new landscape offers opportunities to transform the pressures of today into profitable new ventures. What is also happening is more subtle and potentially liberating, but also potentially generating a dystopia of socially unsustainable inequality, in which a growing share of the population will be mired in chronic insecurity, through no fault of their own. This is not a time for smug libertarian mantras about meritocracy and the bracing effects of competitiveness. If what is happening is allowed to continue without imaginative new social policies, our society will be blighted by millions of people living wretchedly insecure lives and reacting accordingly.

Globalisation, technological change, and government policies have produced a class structure with a tiny plutocracy of the rich (and famous) coexisting with a dwindling salariat, with employment security, pensions and paid vacations, and a rapidly growing precariat, living bits-and-pieces lives, without occupational careers and experiencing declining real wages. Telling the precariat that they must obtain more schooling and training is disingenuous. Millions are currently over-qualified for the labor and work they can expect to be doing.

The reality is that the income distribution system of the 20th century has broken down, and it will not come back. Real wages in rich countries will continue to stagnate and fall. More people, however hard they try, will earn incomes that will not enable them to avoid poverty and insecurity. They will find it impossible to insure against that insecurity.

Do not think they will be underemployed in the conventional sense. An irony of recent labor market developments is that the precariat has to do more and more work, much of which is unrecorded, unrecognised and unremunerated. We must realize that the growing structural inequality is socially unsustainable and increasingly immoral.

The technologies increased the value of human effort – and in the process drove rapid economic progress. Those of the future, by substituting for man’s senses and brain, will accelerate that process – but at the risk of creating millions of citizens who are simply unable to contribute economically, and with greater damage to an already declining middle class. Progress, embedded in the creation of intelligent machines, from robots to automobiles to drones, that will soon dominate the global economy – and in the process drive down the value of human labor with astonishing speed? Hordes of citizens of zero economic value? The simplistic policy answer is better training. But at this pace of change, improving the educational system will be perpetually too little and too late. Likewise, artificially boosting the minimum wage will only hasten the reckoning by subsidizing job replacement by intelligent machines. With the acceleration of emerging technologies, we can expect growing pains with regards to employment, but that doesn’t mean there aren’t viable paths to a better existence.

If you have a job, odds are society benefits from your work, and theoretically, the compensation you receive is how the marketplace values your contribution. All other things being equal, the better you are at your job, the better the compensation. But, as mentioned above, the vast majority of people in the world are confronted with insecurity and aren’t the best at what they do.

At the same time, most people aren’t really satisfied with their jobs — possibly because a lot of positions aren’t necessary. Most would rather do some other kind of work that more closely aligns with their passions or hobbies. But people need a certain amount of money to live, so they take work that meets their and their family’s needs. It’s a tradeoff, but most feel it’s more ethical to sacrifice your interests for stable pay. Some will soon find that the contributions they make to society are no longer valued compared to what artificial intelligence and robotics can achieve. Instead of just some humans being better at your job than you, low-cost technologies will be. As machines take over this work, would we really want to fight for these jobs?

It’s hard to summarize this kind of speculative discussion because there are so many possibilities that are just in the future, but here’s the gist of it: while machines aren’t the cause of modern economic woes, they will have a profound effect within the next century, and we need to be prepared for it.

Maybe this transition will ultimately be a good thing. We will generate more wealth than we ever have before, the economy will grow, and businesses will be able to do new things they’ve never done before. In the long term, this will create a society that potentially improves the quality of life for everyone. To do the things you are good at, benefits society like care, education, art….

The contrast between the age of scarcity in which we have lived and the upcoming age of abundance through new technologies means that we need to pay attention to the social contract. We need to rewrite it in keeping with the dramatic shifts in employment and leisure time that are taking place. People have to understand we are witnessing a fundamental interruption of the current cycle where people are paid for their work and spend their money on goods and services. When a considerable portion of human labor no longer is necessary to run the economy, we have to rethink income generation, employment, and public policy. Our emerging economic system means we will not need all the workers that we have.

New technologies will make these individuals obsolete and unemployable:

Scenario 1 – Automation and artificial intelligence will continue to advance, but at a pace sufficiently slow that society and the economy can gradually absorb the changes, so that people can take advantage of the new possibilities without suffering the most disruptive effects. The job market will change, but in something like the way it has evolved over the last half-century: some kinds of jobs will disappear, but new kinds of jobs will be created, and by and large people will be able to adapt to the shifting demands on them while enjoying the great benefits that automation makes possible.

Scenario 2 – Automation, robotics, and artificial intelligence will advance very rapidly. Jobs will disappear at a pace that will make it difficult for the workforce to adapt without widespread pain. The kinds of jobs that will be threatened will increasingly be jobs that had been relatively immune to automation — the high-skilled jobs that generally involved creativity and problem-solving, and the low-skilled jobs that involved manual dexterity or some degree of adaptability and interpersonal relations. The pressures on low-skilled workers will exacerbate the pressures already felt because of competition against foreign workers paid lower wages. Among the disappearing jobs may be those at the lower-wage end of the spectrum that we have counted on for decades to instill basic workplace skills and values in our young people, and that have served as a kind of employment safety net for older people transitioning in their lives. And the balance between labor and capital may (at least for a time) shift sharply in favor of capital, as the share of gross domestic product (GDP) that flows to the owners of physical capital (e.g., the owners of artificial intelligences and robots) rises and the share of GDP that goes to workers falls. If this scenario unfolds quickly, it could involve severe economic disruption, perhaps social unrest, and maybe calls for political reform. The disconnect between productivity and employment and income in this scenario also highlights the growing inadequacy of GDP as our chief economic statistic: it can still be a useful indicator in international competition, but as an indicator of economic wellbeing, or as a proxy for the material satisfaction or happiness of the population, it is clearly not succeeding.

Scenario 3 – Advances in automation, robotics, and artificial intelligence will produce something utterly new. Even within this scenario, the range of possibilities is vast. Perhaps we will see the creation of emulations, minds that have been uploaded into computers. Perhaps we will see the rise of powerful artificial superintelligences, unpredictable and dangerous. Perhaps we will reach a “Singularity” moment after which everything that matters most will be different from what came before. These types of possibilities are increasingly matters of discussion for technologists, but their very radicalness makes it difficult to say much about what they might mean at a human scale — except insofar as they might involve the extinction of humanity as we know it.

However, in the short term, we’ll likely see displacement because we don’t have the social mechanisms in place to keep up with these changes. In fact, after we ride out the turbulence, we may all find we finally get to have the best of both worlds, wherein we value our work and our basic needs are met. Ultimately, we need a new, individualized, cultural, approach to the meaning of work and the purpose of life. Otherwise, people will  find a solution – human beings always do – but it may not be the one for which we began this technological revolution.

The rise of automation, robotics, and artificial intelligence raises many questions that extend far beyond the matters of economics and employment, including practical, social, moral, and perhaps even existential questions. But, no matter what, we have to address these technological changes, to respond to some things that have already begun to take shape and to foreclose other possibilities.