Bernard Hickey looks at an unsettling prediction that the new winner-takes-all economy of robots and algorithms may actually be a net destroyer of jobs

Bernard Hickey looks at an unsettling prediction that the new winner-takes-all economy of robots and algorithms may actually be a net destroyer of jobs

By Bernard Hickey

This week's report on 'The Future of Jobs' for the Davos economic talkfest in Switzerland has refocused the world's attention on whether the wave of technology change now sweeping around the globe will actually make most people richer.

The unsettling conclusion from the report is that a Fourth Industrial Revolution will destroy millions of white and blue collar jobs over the next four years alone, but create far fewer new jobs in their place. It will also create downward pressure on wages for many of those remaining lower skilled workers who have the jobs robots can't do -- yet. It poses some deep questions about how we educate, train and retrain our young and old, how we tax the winners who take all, and how we support those who can't get jobs in this brave new world.

It also forced me to look more into the history of an insult. I remember being called a 'Luddite' at various times over the last couple of decades by my geekier friends who saw me as a late adopter. I like to think I have most of the gadgets so it was insult that stung, but it was an insult that I didn't really understand until I looked into the history of the word.

No one is quite sure who the Luddite movement was named after, but the legend is that a unemployed young weaver from the North of England called Ned Ludd smashed a mechanical knitting machine in 1779 in a fit of rage after being whipped for idleness. Artisans and skilled craftsmen adopted the legend of 'Captain Ludd' to inspire them in their protests against rise of mechanisation from 1811 to 1817. They organised themselves into groups to break into factories to smash the machines that had cost them their jobs. There were riots and on several occasions the British Army had to be called into put down the revolts.

As the industrial revolution progressed over the following 200 years, hundreds of millions of new jobs were created in areas that no one had thought possible. Some of those artisans changed jobs and their children, once educated, went on into new skilled jobs that eventually made them richer. Some never recovered and sank into poverty and the first industrial revolution's progress towards prosperity for most was no smooth process. Just read any Dickens novel or look at the history of revolutions and wars through the 1800s and 1900s to see that. Eventually the industrialised world settled on a mixed economy model where the state provided education and other social safety nets to make sure the sons and daughters of those weavers were trained and healthy and able to participate in (and vote on) the techno-future.

The debate over whether new technology is a net creator or destroyer of wealth and jobs appeared to be over. It certainly was during the 1990s and 2000s when to be called a 'Luddite' was to be accused of being out of touch and some sort of King Canute-ish figure trying to hold back the tide of inevitably enriching progress.

Fast forward to 2016 and now the question is being asked again: does all this technology change make most of us richer most of the time? The question is not about whether to try to stop the progress because that is impossible, but it is about how to adjust our education systems, our training regimes, our tax systems and our benefit systems to adjust.

The Future of Jobs report concluded from a survey of HR people from 350 global companies with 13 million employees in 15 countries that this Fourth Industrial Revolution would destroy 7.1 million jobs by 2020 and only create 2.1 million jobs. That forecast net job destruction of 5 million jobs forced the report's authors to recommend new training and education regimes, but it stopped short of looking at tax rates or benefits.

These will be the debates of our age. How do we include all our citizens in this brave new world and ensure firstly that they have a decent wage to support themselves, and if they don't, that it is provided from the taxes paid by the hyper-wealthy who are accelerating away from the rest with the proceeds generated by this new winner-takes-all global economy.

The other report to dominate the debate at Davos was from Oxfam. It showed the world's richest 62 people now have the same amount of wealth as the world's poorest 50% or 3.5 billion. Just five years ago the ratio was 388 to 3.5 billion, and over that period the wealth of the world's poorest lower half dropped by 41%.

The Luddites may be as wrong in 2016 as they were in 1811, but this new winner-takes-all global economy could do with a few tweaks.


A version of this article has appeared in the Herald on Sunday. It is here with permission.

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28 Comments

I am now on my 3rd career. ex-marine engineer, ex-building services engineer, now IT. I think to stand a chance to not be on the losing side/career you have to be prepared to move on and quite quickly, ie see it and be ahead of the curve. It is however I think going to get worse, my parents generation could get a job/career for life, my generation not so many of us, our children, a lot more / harder. That bodes ill for stability and level of incomes IMHO.

I agree, however what does happen is that people who are in those occupations and have been for a long(er) time career wise are at the top of the food chain. They then get displaced by the transient worker who's doing as you say, up skilling and making a living as best as you can. The older worker gets moved on. Maybe the retirement age needs to be reduced to 55 or 60 so that there are enough jobs for a growing working age population?

Technology is destroying jobs. I am a great believer that there is a worldwide move towards shorter hours contracts, I personally was brought up to think of a working week as 40hrs. By reducing the working week, employment is being shared out to the masses reducing the unemployment rate significantly and minimizing the risk of civil unrest.

Nothing wrong with robots as such. But there is an income problem for sure. Taxing the hyper wealthy (owners) who benefit from owning those machines is not the way forward Bernard. We all need to own those machines, have control, and capture the benefit for us.
Actually, that's true even without the technology aspect..

So, state ownership of all industry?

State ownership is a dumb solution and you know it dt. So is state intervention by intervention by tax reallocation. But the solution is moving away from the situation where 1% own everything and 99% own nothing. With decreased productivity and widespread marginalisation. So fewer or no big corporations, more self employment, and more people who work in a business owning the business. It's all about the ownership.
Otherwise we are heading back to feudal times.

I think it is all going to turn out differnently than people think.

I have already touched on this saying people will have AI Robots in their garage.

Look at the Raspberry PI going for as little as $5. Now look at the new A64 and the A64+ that is a more powerful computer than the best Raspberry PI and also 64bit computing for $15

Look at what ordinary people are already making
Drones
Cell phones
PC's
and much much more
People are also making their own robots
One guy has built his own convertion kit that turns his car into a self driving car. He hopes to sell the kit for $1000.

Did you see the ISIS video of their workshop?
They are making a self driving car with a dummy behind the wheel that gives off heat etc as if it were a real person. Then this car can drive up to a target without being noticed and explode. Pluss making their own missiles and stuff.

Add to this 3D printers, new nano tech, quantum computing, graphite and much more.

Look at solar power where people can go off-grid and more.

Look at Mesh networking where people can bypass the telcos.

By people making their own stuff will loose even more jobs and hurt bussinesses in the process.

Its a whole new ball game.

It is your destiny...you choose.
Go for double or quits. Or maybe, just end as a sucker. Sucked dry?.
If you choose to borrow money into existence, then the "Doubling Effect" comes into play, compounding certain peoples gains, also alas other peoples losses, as some people would say, "greed is good, money for jam, god knows why?".
Technically right, well maybe?.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11578753
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1157...

Rise of the Machines - Brave New World

Huxley's Brave New World is a novel which takes place in a densely imagined dystopian state.

The World State is a benevolent dictatorship headed by ten World Controllers. In this respect it is similar to the societies imagined by Huxley's near-contemporaries H. G. Wells and Olaf Stapledon. The World State establishes a stable global society where the population is permanently limited. The basis of that stability is the conditioning of citizens to accept their station in life.

This is achieved by: Abolition of natural reproduction

https://en.wikipedia.org/wiki/Brave_New_World

Population reproduction is controlled in a Hatchery, where
The Director of Hatcheries and Conditioning (DHC), is the administrator of the Central Hatchery and Conditioning Centre, where he is a threatening figure who intends to exile Bernard to Iceland

I kid you not - that's what it says - the exile of Bernard

Iconic and Ironic..
It was ever thus in our House.
Abolition of Natural Reproduction was instigated many moons ago on a different Island to this one.
I blame Coronation Street.
I knew my station in life.
Aldous I am told. Yes Dear. Three bags full Dear.
I kid you not.
A brave New World, but I was not that bleedin brave.
Rovers Return...has a lot to answer for.
Benevolent Dictator...I married the 1st of Many.
And it is not even Friday...Funny that.
But I get your point.

'to be called a 'Luddite' was to be accused of being out of touch and some sort of King Canute-ish figure trying to hold back the tide of inevitably enriching progress'

The Luddites were absolutely right -industrialisation would (and did) dehumanise work, eliminate craftsmanship and destroy communities- though there are other factors not foreseen at the time of the Luddites (early 1800s) which make them even more right than ever!

Progress is a myth -particularly so since the 1960s- and much of humanity has been going backwards at an ever-faster pace because industrial activity destroys human health and destroys the very factors that make life-as--we-know-it possible.

Rapid depletion of energy sources.

Rapid depletion of mineral sources,

Rapid depletion of natural resources.

Rapidly increasing pollution of the land, atmosphere and oceans.

'a Fourth Industrial Revolution will destroy millions of white and blue collar jobs over the next four years alone,'

There never was a 'Second Industrial Revolution' nor a 'Third Industrial Revolution'.

The bulk of activity in developed nations use 18th century technology -mining, furnaces, foundries, cement works, glass works etc.- together with 19th century technology -electricity generated by movement through magnetic field, internal combustion engines, chemical modification of natural materials, synthetic resins and other synthesised organic compounds etc.

The primary sector (original Industrial revolution) is destroying the habitability of the Earth, and is perched on a knife edge with respect to easily obtainable energy and resources.

Once the primary sectors go under so does everything else.

Had the Luddites won instead of being hunted down and eliminated (killed or locked up) the world would not be in the shocking mess it is in now.

Contrary to the common economic-financial narrative, it's no longer about jobs but about whether the next generation will have a habitable planet to live on.

All the scientific evidence indicates they won't.

People should stop calling it "A Forth Industrial Revolution". I call it "The First Age Of Empowerment"

People are being empowerd by technology
The Internet
Digital currency
Encryption
And more.

In ten years time most of the Industries we take for granted today will be gone and in 20 years time they will all be gone. The END of the Industrial Revolution and the beggining of the Age of Empowerment.

I am still waiting for the three day weekend and a paperless society that was mooted in my secondary school classrooms circa 1969.

It's good to hope; it's the waiting that spoils it.

Methinks that what is required Bernard is to look a little deeper, to question a little harder. Question the concept, the ideology of being rich, of being richer. Question the concept, the ideology that we actually create wealth or are we destroying real wealth? Our entire way of life is merely a subset, a construction based on those ideas and look how the world is really functioning as a result.

"The significant issues we face today cannot be solved by the same thinking that created them." - Einstein

12
up

........so why the need for immigrants? Our greatest asset is our lack of people.

I think basically we have run of ideas.
See the most overused word in NZ advertising today.
If only we could realise it?...do ya thunk.!

http://www.trademe.co.nz/Browse/SearchResults.aspx?searchString=potentia...

  • Housing ponzi
  • Push down wages
  • New potential voters
  • Lower expectations of working conditions

Around 1980 a book about the future was published with the title FOXCROFT. The story of a single corporation that became so powerful it came to dominate the world and world governemts who then became dependent on, or, subject to the dictates of the uncontrollable organisation called FOXCROFT.

Population was controlled. On their 18 birthday citizens were required to present themselves at a Foxcroft Centre where they were tested and screened. A strict 10% were deemed breeders and were provided with full rights to establish a family unit and breed. Partners were chosen for them. The remaining 90% were deemed not to meet the DNA requirements, became wards of the state, were allocated a living pod (ala Jucy hotel pods), were given regular weekly supplies of a psychotropic hallucinogenic drug that kept them sedated and docile (Ice, Methampetamine, facebook, instagram, twitter) and lived their lives out that way. Chemical reproduction controls.

At that time Google and Facebook were unheard of

Interestingly there is a new book out called the GODS of FOXCROFT
http://www.amazon.ca/The-Gods-Foxcroft-David-Levy/dp/0595129366
Published in 2000 it paints a similar proposition. A time when time is meaningless, when human life is created outside the uterus, and death is a dispensation from The Gods of Foxcroft, not a natural result or individual right

Still pre-Goole and pre-Facebook and pre-Apple. Organisations that don't manufacture anything but are on the cusp of determining the mind-numbed state of the global populace and are so financially dominant they reminded me of the next step being FOXCROFT

It's starting - the Facebook-Apple-iPhone-Google effect - meets all your daily needs
Why he left Facebook because it made him lonely as if he was living alone in a pod
http://www.smh.com.au/digital-life/social-radar/i-left-facebook-because-...

Population will get to the point of being controlled, its inevitable. We are just like bacteria in a petrie dish, sooner or later you run out of resources so its control or be controlled by natural means like a virus or starvation or war. Sounds terrible I know, its a bad as Nazi Germany but breeding should be done by genetic testing. The human race is getting weaker not stronger. Of course I expect 95% people to disagree, currently we have the luxury of choice so its just unthinkable.

Decades old, this slim volume has only become more relevant with age, delineating the ways in which we are shaped by false & distorted images of reality, rather than reality itself. If anything, the advent of the digital age has only increased the power of the image-makers to shape how we view both the world & ourselves -- and that view is utterly artificial & infinitely malleable. Those who control the images control society ... and we see this every day, in the consumerist lifestyle that's fed to a hungry populace eager to gobble it down. Anything of depth, from political discourse to ethical questions to the spiritual dimensions of life, is reduced to simplistic slogans & images designed to manipulate the individual as subtly but irrevocably as possible.

But did I say "the individual"? Even a cursory glance at contemporary society reveals few genuine individuals. The image of individuality is marketed & sold, of course, so that everyone feels special & singular; but the end result always seems to be people who are "individuals" just like millions of others, all believing themselves to be unique. Yet they all buy the same lifestyle, the same ideas, the same Pavlovian responses to their environment, just as they've been perfectly programmed to do. Oh, there's a gloss of superficial variation, to enhance the notion of individuality! But as for the real thing? The few who don't buy into the image are those derided as freaks, outsiders, uncool, etc.

http://www.amazon.com/Society-Spectacle-Guy-DEBORD/dp/0934868077/ref=sr_...

Bleeding luddites. Pontificate about the future and ignore the past.

"In 1820, the vast majority of people lived in extreme poverty and only a tiny elite enjoyed higher standards of living.Economic growth over the last 200 yearscompletely transformed our world, and poverty fell continuously over the last two centuries. This is even more remarkable when we consider that the population increased 7-fold over the same time (which in itself is a consequence of increasing living standards and decreasing mortality – especially ofinfants and children – around the world). In a world without economic growth, an increase in the population would result in less and less income for everyone, and a 7-fold increase would have surely resulted in a world in which everyone is extremely poor. Yet, the exact opposite happened. In a time of unprecedented population growth we managed to lift more and more people out of poverty! Even in 1981 more than 50% of the world population lived in absolute poverty – this is now down to about 14%. This is still a large number of people, but the change is happening incredibly fast."

http://ourworldindata.org/data/growth-and-distribution-of-prosperity/wor...

The indolent youth of today are a waste of the technological progress that has been made over time.

The Apollo Space mission, which landed men on the moon in 1969, is often cited as an example of what can achieved with computers no more powerful than a pocket calculator.

The entire Apollo Space Program cost $25.4 billion USD in 1973... Which if you adjust for inflation is 141.8 Trillion USD in today's money.

Imagine the problems the youth of today could solve if they were given the resources of their parents and grandparents generation..

https://en.wikipedia.org/wiki/Apollo_program#Costs

Best left to the private sector.
"Two months ago, the space exploration company founded by Jeff Bezos fired a rocket into space before demonstrating its ability to land vertically back on Earth.

Now he has done it again, displaying for the first time that his rocket can be reused."

http://www.telegraph.co.uk/news/science/space/12117706/Jeff-Bezos-demons...

Automation is not the problem, the problem is that under the current 'free market' doctrine the benefits of this automation will concentrate on the few. The answer is fundamentally simple, in the same way we mandated a 40 hour working week as the consequence of industrialisation we have to mandate shorter working hours so that the benefits of robotic productivity are shared