| Dark Vision for Jobs: Jobless Future? Is It Different This Time? Posted: 11 Oct 2013 11:50 AM PDT Moments ago, I responded to a reader James from the UK regarding automation on farms. James commented that he only need one laborer where decades ago it took 25 men to do the same job. James asked " If we displace 90% of the workforce in the next 100 years - and we could well exceed this, given rapidly increasing levels of automation (with humanoid robots becoming commonplace in this time-frame) - how will the aggregate consumer afford to consume the average product? The level of work loss seems likely to exceed the level of new product development." My Reply to James History suggests innovation will at some point create more jobs. We have lost jobs on farms but we gained them on the assembly line. We lost jobs on the assembly line and gained them on the internet. We lost jobs on the internet and .... And I don't know what's next. I suspect something with energy but I do not know. If nothing comes, I expect war. Dark Vision For Jobs Just as soon as I replied to James, I noticed another email on the same subject. Reader Andrew asked me to comment on the ComputerWorld article Gartner's Dark Vision for Tech, Jobs. Science fiction writers have long told of great upheaval as machines replace people. Now, so is research firm Gartner. The difference is that Gartner, which provides technology advice to many of the world's largest companies, is putting in dates and recommending immediate courses of action.
The job impacts from innovation are arriving rapidly, according to Gartner. Unemployment, now at about 8%, will get worse. Occupy Wall Street-type protests will arrive as early as next year as machines increasingly replace middle-class workers in high cost, specialized jobs. In businesses, CIOs in particular, will face quandaries as they confront the social impact of their actions.
Machines have been replacing people since the agricultural revolution, so what's new here?
In previous technological leaps, workers could train for a better job and achieve an improvement in their standard of living. But the "Digital Industrial Revolution," as the analyst firm terms it, is attacking jobs at all levels, not just the lower rung. Smart machines, for example, can automate tasks to the point where they become self-learning systems.
Smart machines "are diagnosing cancer, they are prescribing cancer treatments," said Kenneth Brandt, a Gartner analyst. These machines "can even deliver [treatment] to the room of the patient."
Gartner sees all kinds of jobs being affected: Transportation systems, construction work, mining warehousing, health care, to name a few. With IT costs at 4% of sales for all industries, there's very little left to cut in IT, but there is a great opportunity to cut labor.
The companies on the leading edge of this trend include Amazon, which spent $775 million last year to acquire Kiva Systems, a company that makes robots used in warehouses. Google is also on the forefront, with its effort to develop driverless cars. Gartner applies a broader template, and says that the jobs most susceptible to machine replacement involve a range of back-office functions, including transactions, specialization, objectivity, high control, high scale, compliance and science.
This shift will affect employment, said Brandt, at Gartner's Symposium ITxpo. "We believe there will be persistent and higher unemployment." Is It Different This Time? Is it different this time? Is Gartner right? Or is innovation-history right? I have commented numerous times, as early as 2009, if not before, to expect " structurally high unemployment for a decade". Nonetheless, I have been generally optimistic over longer periods of time. History suggests some innovation will create jobs. Is innovation-history right? Even if so, will jobs arrive in time? If not, war-history suggests a far darker view. Are the optimists or the pessimists correct? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Canadian Reader Comments on Outsourcing, Automation and Ten "Real" Problems With the US Economy Posted: 11 Oct 2013 10:28 AM PDT In Ten "Real" Problems With the US Economy I took a look at complaints by Paul Craig Roberts that outsourcing was the "real" problem behind the crisis. I dismissed Roberts' claim, while listing ten real problems, only one of which (warmongering) noted by Roberts. Ten Real Problems - Fractional Reserve Lending
- The Fed
- Lack of a gold standard
- Deficit Spending
- Public unions
- Davis Bacon and prevailing wage laws drive up costs
- Disability fraud
- Warmongering
- Politicians get into bed with corporations, unions, and crony constituents
- Lack of incentives to hold down costs on medicare, food stamps, and entitlements
I stated "If you fix the first four or five, most of the rest of the problems will be fixed automatically."
Comments From a Canadian Reader Reader Martin, from Canada, thought I should have emphasized one of the points I made about outsourcing. Martin writes ... Hi Mish,
I am a bit addicted to your Blog, and love your different points of view, so thank you.
Sometimes you make some small points/comments that actually need to be in bold, I found this comment by you particularly interesting:
"As for the loss of manufacturing jobs, I would point out that even China is losing them - to automation."
You are very right! A very close friend of mine designs systems and programs automation (robotics) for a large electronic manufacturer headquartered here in Toronto, Canada. I told him that he chose a great line of work based on what I have read on your Blog. They also have manufacturing and contracts with companies in China. Recently on one of his trips to China he visited one of these plants and found it was totally automated (they build components for solar panels, which are then sent to Canada to be "built-in Canada", which is another story altogether). He was amazed that in China of all places with all of their "cheap labour" they would automate an entire plant! While going over the design and systems he worked closely with the owners, they told him that true labour costs were growing exponentially and they wanted to get a head of the curve. Well turns out more and more of these plant owners are going this way, a true sign of the future.
It's also very neat to see that these entrepreneurial Chinese are using contracts with big western companies to gain access to experienced manufacturing process and talent, pretty smart if you ask me.
Cheers,
Martin Thanks Martin. Outsourcing is a scapegoat for the real problems I mentioned. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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