Andrew McAfee: Race Against the Machine

Andrew McAfee, coauthor of Race Against the Machine did very interesting TED talk recently on the subject of his book, overlapping heavily with the subject of this blog. The first half of the talk does an excellent job of stating the problem. He demonstrates how businesses are profiting more than ever today, investing in technology more than ever -- but are not hiring. He also talks about how various technologies are starting to catch up and even eclipse humans in cognitive tasks such as translation and writing grammatically-perfect articles, and that 'we ain't seen nothing yet'.


Oddly, while demonstrating that 'droids are coming for your jobs' he also claims that current debate on 'whether these technologies are affecting people's ability to make a living' is 'missing the point entirely'.

For the millions of people people losing their houses to foreclosure, shuffling in the dole queues and soup kitchens, collecting paltry benefits, wallowing in depression and freezing in alleys and tent cities I would say the concern about losing income is exactly on point and in need of urgent focus. Is he saying that we ought to just wait out the storms in a 'laissez-faire' kind of manner and that the problems will spontaneously sort themselves out?

Unfortunately, I think so. He doesn't offer anything in the way of suggested actions and decisions we could be making. Instead, his talk pivots half-way through onto an optimistic feel-good frame which I think has shaky foundations. He points to one good aspect of technology at the bottom of the pyramid -- citing a study of poor rural fishing villages leveraging the power of cell phones to improve their knowledge of the market situation and reduce waste.

Yes, we know that human productivity rises when technology is introduced, and it's initially a huge benefit to independent workers. But what happens when poor fishermen with creaky boats come into competition with hyper-efficient automated fishing operations? On land, where robots have a surer footing, we can see how small, poor farmers suffer in competition with gigantic, scaled and highly automated agribusiness.

A time when hands are not needed to steer the ship and haul the fishing nets can't be too far away, as these are pretty routine tasks, and there's plenty of research going into ship automation. With no income stream to leverage,  information carrier technology becomes increasingly useless, not to mention unaffordable (in the current consumer paradigm).

I'm too am hopeful that technology will benefit the neediest in the world. We know of it's potential, but we can't afford to think that technology will steer itself to that end without heavy political upheaval going on of some kind or another. That's the missing step in the transition that too few people (and almost no prominent futurists and economists) are willing to talk about -- including myself, for now.

U.S. Unemployment is in Fact Getting Worse

Obama and much of the US media has recently managed to paint a bright picture of jobs recovery this quarter. Unfortunately, reality begs to differ. The perception was manufactured with clever manipulation of the data. This fantastic analysis, by Daniel R. Amerman at Financial Sense takes a candle to the lie. From the Article:

"When we pierce through this statistical smoke and mirrors and factor back in [...] 9 million jobless whom the government has defined out of existence, then the true unemployment rate is 19.9% and rising, and not 8.3% and falling. [...]

Since 2007, the Constant Workforce Participation unemployment rate has risen from 9.6% to 19.9%. This increase of 10.3% for a labor pool of 160 million people means 16.5 million additional jobless people since 2007.


The difference between 6.7 million missing jobs with a rapidly improving jobs picture, and 16.5 million missing jobs with unemployment still rising, is the difference between night and day. It is the difference between a recession being brought under control - and a depression that continues to worsen."

Can We Really Depend on Hi-Tech Start-Ups to Power Future Employment?

Many who refute the coming obsopocalypse argue that displacement by technology simply frees people up to do new jobs in more cutting-edge ventures -- ventures often created by the very same disruptive technology. Obviously there new businesses and new jobs categories pop up all the time -- but the related jobs are just not being created in large enough numbers any more.
 
The Kauffman Foundation produced an excellent study last year Starting Smaller; Staying Smaller, America's Slow Leak in Job Creation detailing how new start-up businesses have become increasingly poor engines of employment.

From the report:

''Even before the Great Recession, firms were starting smaller. They were opening their doors with fewer workers than the historic norm and were relatively reluctant to expand their workforces even during good economic times. Since at least the middle of the last decade and perhaps earlier, the growth trajectories and survival rates for these businesses meant that they were contributing fewer and fewer new jobs to the  economy.
[...]
Media and academic commentators who bemoan America’s unusually slow rate of job creation after the 2007–2009 recession are missing what we believe is a longer-term trend that began earlier in the decade and might best be called a slow jobs “leak.”
[...]
In many cases, companies or individuals that once would have been hired as employees of a business now are performing the work on a temporary basis as contractors through other professional service organizations or under their own self-employment contracts. These individuals, while sometimes characterized as "entrepreneurs,” are not likely to employ others or to reach significant scale".

Some of key trends from the report:
-The number of new start-ups has declined significantly in recent years
-The percentage of the new business that are providing jobs for other people (other than the founder) is decreasing -- there's a huge rise of one-person businesses.
-The average number of employees per new business has been declining since 2002 (when 10.8 would be employed) to less than 8 now
-Fewer new businesses are surviving more than 5 years
-Of  the businesses that survive their initial years, and go on to grow their operations, job growth is now slower than the historic norm

The extinct switchboard operator

The report refrained from speculating on the causes of the job growth leaks compared to previous decades. To me, and I believe to anyone who gives it 5 minutes thought, the story seems quite obvious. The timeline completely coincides with the computer revolution, and the growing use of computers makes an increasing number of former roles redundant.

The precipitous decline in job creation of contemporary start-ups is an entirely predictable result of technological development. Advancing technology, especially IT tools in the past 2 decades, increases worker productivity, allowing companies to do more with less workers.

For example, secretaries, data entry staff and even accountants are found less and less in new companies. The notion of a human secretary at a desk could soon seem as quaint as telephone switchboard operators today.