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Musings Report 2019-30 7-27-19 Automation and the Crisis of Work
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
Thank You, Contributors!
Thank you, William P. and Kerry W. for your generous support of my work, and welcome new subscriber-patron Teresa W.
Automation and the Crisis of Work
When it comes to the impact of automation (robots, AI, etc.) on jobs, there are two camps of thought: one holds that technology has always created more and better jobs than it destroys, and this will continue to be the case. The other holds that this wave of automation will destroy far more jobs than it creates, but the solution is to tax the robots and use these revenues to distribute the wealth to everyone who no longer has a livelihood.
In either case, we’ll get richer: if technology generates more high-quality jobs, replacing lower-quality jobs lost to automation, we’ll collectively get richer, and if technology destroys jobs but creates immense profits that can be distributed to everyone as Universal Basic Income (UBI), then we’ll get richer via distributing profits to everyone.
But what if neither option is realistic? What if the jobs that are created in the wake of automation are lower-quality, lower pay and far more insecure? And what if automation leads to much lower profits rather than much higher profits? What if there’s nowhere near enough profits to distribute to everyone as Universal Basic Income? If that’s the case, we’re collectively becoming poorer, even if a small percentage of the population is reaping wealth from automation.
Consider this first-hand account from a reader on Facebook (used with permission):
"With almost 40 years in the pipeline business I have seen detecting and locating leaks in pipelines go from 6-8 men, 2-3 trucks, maybe an airplane and take days. With three pieces of equipment (Laser methane detector and a Optical Gas Imaging camera), $300 drone and a 4 X 4 pickup, one person can cover in a few hours what could take days to weeks to find years ago.
The work I do has displaced at least 6 if not more workers plus the capital cost of the equipment. The total cost of all my equipment is less than $200K and labor cost of less than $2K.
A "Smart Pig" can detect, measure and locate a corrosion indication within mm's. The fixed cost of the equipment is high but the incremental cost per use is low. Manpower and equipment has gone from 12 workers to 4-5 depending on size. The information found can prevent loss resulting in environmental damage and economic loss to the pipeline owner. Less people doing more work to find problems. Using technology instead of manpower."
Between half and two-thirds of the workforce has been obsoleted by these technologies. If there is any competition in the manufacture of the equipment, it's likely prices will fall as components become commoditized and decline in price.
Sectors of the economy many hope will create more jobs are seeing the same dynamics. A friend recently described the technologies being deployed to increase the yields and reduce labor in organic sustainable farming: drones that monitor the water and nutrient needs of crops with sensors and relay the data to drip-irrigation systems.
As for training students to code/program: many of these tasks are being automated as well.
Even as we wring our hands over the potential for individually-targeted advertising to sway elections, we also have to ask: why should any advertiser pay marketing firms to distribute bulk emails and mailers, buy TV/radio/print adverts, etc. when an essentially automated technology can craft a data-driven micro-targeted pitch to individuals?
My point here is that it's not just blue-collar jobs that are being obsoleted, but well-paying white-collar jobs are increasingly being automated as well.
The jobs that are being created are low-pay, contingent, insecure service jobs that cannot support a middle-class life or accumulation of capital.
If we look at the gig economy that's arisen to staff on-demand services (Uber, Lyft, GrubHub, etc.), we find low earnings, no benefits and the costs and risks of auto ownership being offloaded from the corporation to individual owners.
These jobs may be "new" (although they look very similar to "old" jobs such as delivering milk) due to the facade of smartphone technology, they lack the security and compensation needed to afford a middle class lifestyle in most U.S. urban areas. In other words, they are not replacing jobs lost with equivalent jobs.
The idea that profits will pay for Universal Basic Income is simply not realistic. Even we taxed all the Big Tech corporations at a rate of 75% (a rate that's politically unrealistic), that would yield up $100 billion, one-tenth of UBI's minimum cost.
As I've discussed in my books, there's another crisis of work that UBI doesn't solve: the majority of people want and need the purpose, meaning and structure of a job--a positive social role, a way to gain self-respect, an avenue of control of one's life, a source of dignity and a means of getting ahead.
Technology, like natural selection, has no goal. Technology doesn't have a teleological drive to employ humans, save the planet or any other goal we might choose. In the current socio-political-economic system, technology is mostly aimed at maximizing profits. The surest way to reduce costs is to replace costly humans with automated tools.
If we want technology to help us create gainful work, we'll have to set that goal, and create incentives other than maximizing financial profits. Perhaps one first step might be to broaden our definition of "profit" from the purely financial to one that includes "utility" and "value" for local and global communities.
Highlights of the Blog This Past Week
Once "Prosperity" Falters, the Legitimacy of the Status Quo Evaporates 7/26/19
It's Not Just the News That's Fake--Everything's Fake 7/24/19
Our Ruling Elites Have No Idea How Much We Want to See Them All in Prison Jumpsuits 7/22/19
Best Thing That Happened To Me This Week
BBQ with our family friends, catching up with their daughter who just completed a 2-year stint in the Peace Corps.
Musings on the Economy: Could Treasury Yields Rise?
With the Federal Reserve signaling its willingness to lower the Fed Funds rate, it seems everyone is prepared for Treasury yields to decline further.
When everyone is on one side of the trade, markets have a way of doing the opposite of what everyone expected.
What could cause Treasury yields to rise, despite the Fed lowering its target rates?
One theory holds (and it is just a theory) that foreign entities which borrowed heavily in US dollars during the decade-long boom are now facing a dollar shortage, as there isn't enough USD available to service these debts and pay back the principal.
It seems non-US debt denominated in USD is in the trillions, so this purported USD shortage isn't implausible.
So how do these entities raise US dollars? By selling their Treasury bonds.
This may be one way of explaining the ongoing liquidation of Treasury holdings by overseas owners.
Since Treasury yields are set by supply and demand, if buyers are scarce, yields will rise until the bonds are bought by somebody.
I have no idea if Treasury yields will rise or not, but it seems at least possible that the long-duration bonds (10-year, 20-year, 30-year) might rise if those durations are being sold by overseas owners to raise cash.
Were yields on long-duration Treasuries to rise, that would throw a wrench in expectations of declining rates.
From Left Field
Facebook’s new poker-playing AI could wreck the online poker industry--so it’s not being released. Multiplayer poker is the latest game to fall to artificial intelligence, and the techniques used could be vital for trading, product pricing, and routing vehicles.
Seeds of Revolution: Save Our Food. Free the Seed.
Road-Tripping with the Amazon Nomads: To stock Amazon’s shelves, merchants travel the backroads of America in search of rare soap and coveted toys.
Economics Is Broken: A former economic adviser to Bill Clinton and Barack Obama argues that the field should be focused on maximizing people’s happiness and fulfillment.
Turn On, Tune In, Rise Up
Jeffrey Epstein: how US media – with one star exception – whitewashed the story-- why now?
How America’s Biggest Bank Paid Its Fine for the 2008 Mortgage Crisis--With Phony Mortgages. -- why are we not surprised?
Quartermaster Meigs was essential to winning the Civil War.
Fibromyalgia Linked to Gut Microbes
Most Veterans Say America’s Wars Are a Waste. No One’s Listening to Them. There's a widening gap between Washington's bipartisan militarism and veterans' bipartisan war-skepticism.
Manufacturers Move Supply Chains Out of China: Tariff costs prompt executives to shift production to other countries; ‘Once you move, you don’t go back’
The Black Hole Engulfing the World's Bond Markets-- negative interest rates destroy pension funds and other institutions that need low-risk returns on capital...
Germany’s renewable energy program, Energiewende, is a big, expensive failure-- read carefully to understand why solar/wind is no panacea...
"Do not indulge in dreams of having what you have not, but reckon up the chief of the blessings you do possess, and then thankfully remember how you would crave for them if they were not yours." Marcus Aurelius
Thanks for reading--
charles |
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