Technological unemployment is (almost) here

[giantdragon]

For the last 200 years increase in the labor productivity have leaded to higher standards of living and creating jobs in new areas. Arguments that robots can leave people out of work have been called "Luddite fallacy" and dismissed by most economist and politicians.

But look what happens now. Highly paid blue-collar jobs have been already replaced with robots or outsourced to China. Service sector is most difficult to automate, so most jobs (>80%) are concentrated here today. Professions which in the past being considered as temporarily for students and school dropouts (fastfood cooks and waiters, bartenders, janitors, taxi/truck drivers, cashiers etc) now become acceptable even for adult people with college degree, however they also start showing signs of the automation and no doubt these jobs will gone after 5..10..20 years. Skilled white-collar jobs aren't safe places anymore - software reduce demand for accountants and tax consultants, cloud computing hits IT-workers, emerging AI systems like IBM Watson will definitely shrink number of doctors/lawyers/journalists and other data-processing jobs. Personal 3D printers could break away whole supply chains (manufacturing -> shipping -> warehouses -> retail sale) leaving millions of "useless intermediaries" out of work.

Problem of the technological unemployment is well described in the book "Lights in the tunnel". Personally I don't agree with the solution offered there, however author provides strong proof about problem's seriousness.

This is the idea behind the "Luddite fallacy". At  present, I  suspect  that  most  economists  would probably be likely to agree with this statement and, therefore,  disagree  with  what  I  have  suggested  in this book. Here, in a nutshell, is my argument for why I think we will end up with a serious unemployment problem: As technology advances and industries automate, this improves the efficiency of production and tends to make the  products  and  services  produced  by  those  industries more  affordable.  That  leaves more  purchasing  power  in the pockets of consumers. Those consumers then go out and spend that extra money on all kinds of products and services produced by a variety of industries. Some of those industries  are  relatively  labor  intensive,  so  they  have  to hire more workers  to meet  this demand—and  so overall employment remains stable or increases. This is the reason that,  historically,  technology  has  not  led  to  sustained, widespread unemployment. My argument is that accelerating automation technology will ultimately invade many of the industries that have traditionally been labor intensive. Additionally, the process of  creative  destruction  will  destroy  old  industries  and create new ones, and very few of these new industries are likely to be labor intensive. As a result, the overall economy will become less labor intensive and ultimately reach a  "tipping point". Beyond  this point,  the  economy will no longer be able to absorb the workers who lose jobs due to automation: businesses  will  instead  invest  primarily  in more machines. I have also argued that this process will be relentless, and if it is not addressed by some type of government policy, we may ultimately see a precipitous drop in consumer spending as a substantial fraction of the population loses  confidence  in  its  future  income  continuity.  That, of course, would result in even more unemployment and a downward spiral would ensue.

Point (4) on this chart means "peak jobs" - after it number of the working positions taken by automation will start outperforming number of jobs appeared in new areas. Many evidence shows that this point was already passed in 2000s, but unemployment growth have been artificially inhibited by credit bubble. As you know it busted in 2007 starting current recession from which the economy still not recovered - some people even noticed that job growth during recovering was too weak and unemployment levels created "new normal".

If it is true and "Luddite fallacy" is no more a fallacy, sooner or later people start to understand what is happening. Governments probably cannot do anything because they don't have enough funds even now, not mentioning extra load on the welfare system from increased number unemployed and falling consumer expenditures. Desperate jobless will have no other choice than to raise civil unrest and demand solutions from the govt, most likely there will be revolutions, even civil wars - capital owners and lucky "tech elite" (programmers, scientists, 3D-model designers etc whose jobs cannot be automated) probably won't peacefully accept high taxes and/or property expropriation. To prevent this scenario governments must start thinking right now and very fast - by my expectations existence of technological unemployment will be clear for the majority of people in developed counties after less than 5 years.

Most publications about tech unemployment issue promote an idea of the unconditional income to be paid to each citizen regardless does he or she is working or not. Switzerland even decided to perform a referendum about this measure soon. Personally, I think it is not a good solution - vast majority of "useless" people will spend entire lives on watching TV, games, alcohol, drugs etc. Assumption that these people could start innovative business is false in general, may be only few percents will do so, other will just degrade to the level of monkeys. Think about "bread and circuses" in the Ancient Rome and what was the result.
Also "Useless" people will be angry living on this tiny unconditional income and seeing how do tech elite (people with jobs) lives, so there no matter will be social tension. Providing unconditional income may be impossible at all - it requires extremely high taxation which probably will result in capital flight and fast economy collapse, so it must be implemented it all countries of the world simultaneously to be successful (e.g. by United Nations resolution mandatory for all members).

Alternative solution is to reject free market capitalism entirely and switch to the planned economy. The state will own all production means and hire workers, so full employment can be achieved - by reducing working day for just 1-2 hours, developing large scientific projects like nuclear fusion and far-space exploration etc. Don't blame planned economy for the disadvantages that USSR had, by using state-wide ERP-like software systems (aka modern version of the Chilean project "Cybersyn") they can be gradually reduced.

If you have another ideas, propose them in the thread. But please don't tell me 1000th time that I have the "Luddite fallacy" - even respectful analysts like Gartner acknowledge the problem.

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[johnyj]

And a huge problem is that people now have to compete with computer to win at intelligent front, thus become more and more stressed out then ever due to higher and higher hardware/software processing power

[dancupid]

Automation will just make things cheaper, so people will need less money and just need to work less.
If the automation doesn't make things cheaper then how will all these people without jobs be able to afford the products created by this automation? How will this automation survive economically?

These problems are always resolved automatically and naturally by market forces.

aside:
Unemployment is an artificially created situation used by governments to keep the employment market competitive and wages low.
It's easy to solve n% unemployment if you want to - just make everyone work n% less and thus create n% more work.

[giantdragon]

If the automation doesn't make things cheaper then how will all these people without jobs be able to afford the products created by this automation? How will this automation survive economically.

Wrong assumption. People must earn above some minimum to be able to live and work (food, shelter, transportation, education, healthcare etc) while automation requires only one-time big investment and much smaller costs on electricity and maintenance. Robotic systems become more cheap each day and after some point will fall below minimum wage for the human workers (e.g. this already happened for ATMs and self-service checkout lanes in supermarkets).

These problems are always resolved automatically and naturally by market forces.

Good performance in the past does not guarantee the same in the future. "Luddite fallacy" is just another rule of thumb like Moore's law, so it is not guaranteed to last forever.

It's easy to solve n% unemployment if you want to - just make everyone work n% less and thus create n% more work.

Do you mean the government can enact the law limiting working day to 2-4 hours? In free market economy capital owners will simply move away production/services to the country without such legislation.

[dancupid]

It's easy to solve n% unemployment if you want to - just make everyone work n% less and thus create n% more work.

Do you mean the government can enact the law limiting working day to 2-4 hours? In free market economy capital owners will simply move away production/services to the country without such legislation.

At 5% unemployment it would just reduce a typical working week by 2 hours, so with some clever economics it could be possible
But generally I agree - there is no economic incentive for a government to significantly reduce unemployment without reducing their competitiveness.

[john11johng]

Automation will just make things cheaper, so people will need less money and just need to work less.
If the automation doesn't make things cheaper then how will all these people without jobs be able to afford the products created by this automation? How will this automation survive economically?

These problems are always resolved automatically and naturally by market forces.

aside:
Unemployment is an artificially created situation used by governments to keep the employment market competitive and wages low.
It's easy to solve n% unemployment if you want to - just make everyone work n% less and thus create n% more work.

Why do people like you exist.

I highly reccomend taking a kindergarden level economics course (If it would exist). Would dramatically boost your knowledge of how an economy functions.

[Mike Christ]

It seems we're barreling toward socialism, or socialism.  If those are our two options, I'm rooting for socialism; it seems capitalism doesn't function right when you have a people without labor, since the owners of capital have no way of selling their products to people who aren't working.  Rather, if people mutually agreed to work the land for their own benefit (in this case, agreed that the machines should do it), they can get the basic necessities they need and continue to work (in the fields machines can't automate, of course, unless A.I. becomes a real thing) to improve their condition.

Which is my hang-up; I can't picture a world without money, for this implies a world in which labor is not necessary, ergo a store of one's work is no longer a necessity.  This is not because I believe it is impossible, but because it is so abstract from the world as we know it that I would need a complete understanding of the world as it is just to see one that completely isn't.

But we're left with a problem: what if you don't want to be some kind of scientist or creative?  Perhaps the scientists and the creatives still need human labor to assist them, and can be paid for doing that; since all the necessary work is handled by the perfect slaves and thus, all items necessary to life are essentially very inexpensive and high quality, it seems a person can still make a great living while working few hours; socialism normally has this effect but the machines help tremendously.  After all, the original machines were the natural driving forces behind agriculture some 8k years ago, allowing people to not only feed themselves but to feed others.  Now we're to the point where machines can potentially completely replace the need for a human laborer.  The only difference with all our technological advances, the surplus created by machine tends to get sucked away to whomever owns the means of production, thus making the wealthy class possible at all.

And then there's the RBE conceived by Jacque Fresco which I'm not entirely sure about.

Anyway, I don't see either of the listed options as permanent solutions; one is bound to break when people don't want to be taxed to their eyeballs, the other has proven in the past to be troublesome, and not to mention how much limited freedom curtails in being unable to decide for oneself what the self needs and doesn't.

[notme]

Automation will just make things cheaper, so people will need less money and just need to work less.
If the automation doesn't make things cheaper then how will all these people without jobs be able to afford the products created by this automation? How will this automation survive economically?

These problems are always resolved automatically and naturally by market forces.

aside:
Unemployment is an artificially created situation used by governments to keep the employment market competitive and wages low.
It's easy to solve n% unemployment if you want to - just make everyone work n% less and thus create n% more work.

Why do people like you exist.

I highly reccomend taking a kindergarden level economics course (If it would exist). Would dramatically boost your knowledge of how an economy functions.

That comment was entirely unproductive.  Instead of mocking him you could help him learn.

[giantdragon]

@Mike Christ, of course resource-based economy (Jacque Fresco "Project Venus") is the best solution, but it requires much higher level of technology than we have now and probably impossible in near-term, therefore I haven't added this variant to the poll. However, market-driven economy collapse is imminent if no action taken within 3-5 years thus governments must act immediately. Unconditional income or transition to the planned economy are only ones solutions that can be implemented rapidly BEFORE massive riots and/or civil war will fire around the world (in developed countries at first, then also in third-world).

[Mike Christ]

@Mike Christ, of course resource-based economy (Jacque Fresco "Project Venus") is the best solution, but it requires much higher level of technology than we have now and probably impossible in near-term so I haven't added this variant in the poll. However market-driven economy collapse is imminent if no action taken within 3-5 years thus governments must act immediately. Unconditional income or transition to the planned economy are only ones solutions that can be implemented rapidly BEFORE massive riots and/or civil war will fire around the world (in developed countries at first, then also in third-world).

Ahh all right, I see what you're trying for; I feel it's entirely necessary for these revolts and riots to occur, however.  As much as I don't want them to happen, people need to experience the full front of their irresponsibility or they'll never learn to the error of their ways.  I feel it will only exacerbate the problem by asking government to employ a solution, as both of them grant them further power, and it is through this redistribution of power from the individual to the state that allowed men to manipulate the economy to this extent.  The pathway back to 1984 will be the one that allows other men full control over our every action; if people want a better world, they must inevitably realize that it is they who must work for this world.  It is always through fear we further enslave ourselves; we must face this fear and take responsibility for our future, for if we are truly incapable of solving this problem on our own, we have no right to ask for anything better than we have now.

We're in the point of no return; there will be a lot of short-term pain, but the sooner we get it over with, the better off we'll be.  The only alternative is a can and a road, which is what we've been doing for a long time; the longer we kick this can, the longer the walk back to a place we can call normal.

[johnyj]

In the future when most of the works will be done by machines and AIs, there will be a big problem for majority of people to get an income. I think in such case there must be a system that distribute AI ownership to every social members. It's all about ownership

[justusranvier]

Two centuries ago, upwards of 98% of the population was involved with food production.

After labour saving devices were invented which allowed a tiny minority of the population to feed everyone there was massive societal upheaval as an overwhelming majority of the populations suddenly had nothing to do at all until some intrepid central planners came along to set everything straight, tell everybody what to do, and save the day.

Oh wait, actually that's not at all what happened. When people stopped needing to farm they figured out how to reallocate their time and effort all by themselves.

Never mind.

[Mike Christ]

Two centuries ago, upwards of 98% of the population was involved with food production.

After labour saving devices were invented which allowed a tiny minority of the population to feed everyone there was massive societal upheaval as an overwhelming majority of the populations suddenly had nothing to do at all until some intrepid central planners came along to set everything straight, tell everybody what to do, and save the day.

Oh wait, actually that's not at all what happened. When people stopped needing to farm they figured out how to reallocate their time and effort all by themselves.

Never mind.

What I'm most curious about is where they'll reallocate; it seems our future economy will be entirely the cause of scientists and creatives.  It would seem society's greatest maintenance, then, would be in education, and a lot of it.  I have high hopes of a world where everyone is very intelligent, but I can't help but wonder of the people who decide they do not want to worry about such matters.

[giantdragon]

Two centuries ago, upwards of 98% of the population was involved with food production.
Oh wait, actually that's not at all what happened. When people stopped needing to farm they figured out how to reallocate their time and effort all by themselves.

There are only 3 basic sectors in the economy: agriculture, industry and services. Mechanization of the food production freed people to produce more goods like clothes, cars, TV sets, furniture etc, and further automation of the industrial sector moved 80% of the population in services areas (IT, banking, transportation, retail). Moreover, technology advancement still continues - automation started intruding into service sector and in this case there will be no extra sector in which to move "useless" workforce. No doubt it will result in free market capitalism collapse if no action from government taken (e.g. unconditional income introduced).

[leannemckim46]

We live happily ever after just like wall-e.

[waltermot321]

In the future when most of the works will be done by machines and AIs, there will be a big problem for majority of people to get an income. I think in such case there must be a system that distribute AI ownership to every social members. It's all about ownership

I don't think so, food might became close to free that time....

[giantdragon]

I don't think so, food might became close to free that time....

Food production requires a lot of energy, but economic collapse caused by tech unemployment will happen much faster than invention of cheap abundant energy source.

[DeathAndTaxes]

Do you mean the government can enact the law limiting working day to 2-4 hours? In free market economy capital owners will simply move away production/services to the country without such legislation.

Governments ALREADY do limit the workweek.  The "40 hour" workweek was established in 1937.  Since then the productivity of the average worker has increased by a couple magnitudes.   We still cling to 40 hour workweek like it is some fundamental law of physics.   No reason a government (or many governments) couldn't reduce it to 35 or 32.

If we are 10% below peak labor then reducing workweek 10% would compensate. 

[giantdragon]

No reason a government (or many governments) couldn't reduce it to 35 or 32.

If we are 10% below peak labor then reducing workweek 10% would compensate.  

This is not feasible while corporations have large lobbying forces in the government. In some countries we can see even inverse processes now - softening working hours regulations as government try to make own country more competitive for the capital owners.

[Shawshank]

Unless there is major unrest, it seems we are surely moving towards a more knowledge-oriented economy. The problem exists because those who are not capable to adapt are being left out. It has been happening for ages, though. In the Roman Empire, for example, those without good sight or physically weak may had trouble to survive. How to tackle these issues is definitely a challenge. 

There will always be a need for human labor because human needs are insatiable. Once all needs seem to be fulfilled, new needs will arise: immortality, eternal happiness, travelling to the space, travelling to the future, sending bitcoins with your mind... And don't forget poetry. Machines can't do that.