Patrick Watson argues we must prepare now for the mass upheaval coming as machines take humans' jobs

Patrick Watson argues we must prepare now for the mass upheaval coming as machines take humans' jobs

By Patrick Watson*

Whether you see it or not, a machine is coming for your job right now. Yes, yours.

AI isn’t that far along yet... so it’s not that the machines want your job. The threat comes from humans who build and buy machines to replace other humans, all in the spirit of efficiency and cost saving.

Ideally, we’d give the machines the chores we don’t feel like doing and find more productive, enjoyable work. Unfortunately, the world isn’t ideal.

Which means we are entering a period of major economic change. Not vaguely in the background, but up close and personal.


Photo: Getty Images

Laundry jobs lost

We all wear clothes (though perhaps too many) so we have to wash them. Washing machines do this for us now, but a century ago, doing laundry provided lots of jobs.


Graph: Michael Osborne, University of Oxford

As you can see, laundress career opportunities disappeared after the washing machine’s invention. But not right away—this new technology took decades to spread. Laundresses had plenty of time to find other jobs.

This time around, some occupations probably won’t have that luxury. Technology moves faster now. Smartphones went from nonexistent to ubiquitous in five years.

Four more years?

Researchers and economists have been trying to get a grip on how fast all this will happen. The truth is, no one knows for sure.

But waiting to see the outcome is a bad idea. Better to prepare for the worst case.

A new World Economic Forum Future of Jobs report predicts machines will do 42% of all labor (by hours) by 2022 and more than half of it by 2025.

This should ring alarm bells. The year 2022 is just four years from now. If WEF is right, millions of humans will see their jobs automated in less time than it takes to get through high school. What are they supposed to do?

The good news is, new kinds of work will probably appear—work humans will still be better at. But there will be a mismatch between unemployed people and the skills needed for these new jobs. They will need retraining—and more than a little bit, says WEF.

By 2022, no less than 54% of all employees will require significant re- and upskilling. Of these, about 35% are expected to require additional training of up to six months, 9% will require reskilling lasting six to 12 months, while 10% will require additional skills training of more than a year.

Now, are you in a position where you can simply stop working for six months and go back to school? Probably not.

Of course, you may have no choice about the “stop working” part, but your expenses will continue. You’ll either burn through savings (if you have any), go into debt (if you can get a loan), or find some “survival job” (competing against millions of other displaced workers).

This isn’t a small problem. Karen Harris and her colleagues at Bain Macro Trends Group estimate the US will lose 40 million jobs to automation by 2030.


Source: Bain & Company

Note the 40 million figure is net of new jobs created as demand rises in some segments. Furthermore, the 2030 timeline may be overoptimistic if WEF is right.

Now add in the rapid pace of technological change. We are headed toward a period in which millions of workers and their families may be in deep trouble all at the same time. We’re going to find out whether misery really does love company.

What does such an economy look like? Probably something like this:


Photo: Wikimedia Commons

That’s Al Capone’s Chicago soup kitchen in 1931. I will let you imagine who this era’s benevolent gangsters will be.

Micro-macro

Economically, this is both a micro and macro problem.

It’s micro for those who will lose their jobs and end up in the soup lines. They will be in a world of hurt.

But these people have landlords or mortgage lenders who won’t get paid. Merchants where they once shopped will see lower sales. The impact will cascade through the economy.

Now, to some degree, this may be self-correcting. Mass unemployment could reduce wages, making the machines relatively less attractive. But by definition, that can’t help everyone, would take time, and still leave many gaps.

A micro and macro problem needs micro and macro solutions.

On a micro level, everyone should stop assuming their current role will still exist by 2025. It probably won’t. Identify something else you can do and start preparing for it… now.

On the macro level, politicians and business leaders need to recognize what is coming and what it will do to their voters, workers, customers, and shareholders. Then find solutions.

What won’t work is to keep thinking the problem is a long way off and will take care of itself. It’s not and it won’t.

We can get through this… but not if the response is denial and paralysis.


*Patrick Watson is senior economic analyst at Mauldin Economics. This article is from a regular Mauldin Economics series called Connecting the DotsIt first appeared here and is used by interest.co.nz with permission.

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I have a friend who's son works for Freightliner in the States. They went into self driving trucks about 6 years ago. The problem was the technology got ahead of the practical stuff like refueling etc. That and the constant upgrades to software that negated so much previous work. I think they slowed the project down, they got too far ahead of what people were willing to accept. Trucks went all gas, oil change at the same time if needed etc. He said once one learnt to back in to a supermarket bay, they all could.
He talked about how incredible the automated ports were, the technology just rolling out, most of us totally unaware.
It got a bit odd living in a place where 140,000 people live in tents , developing technology that shrunk the workforce.

Last week I had a meeting with my accountant, he thinks his industry has 10 years left, about the time the i-phone has been out. I don't think our IRD can move that fast.

In the Eu they are saying %14 percent of jobs are ready to be automated, in a few years it will be %35.
How do people built capital without a job, do the rich just stay rich and rest stay poor? Is that the reason behind the resource grab?

https://www.eu-nited.net/robotics/news-events/robotics-news/putting-face...

Some thoughtful insight there Andrew. A good example re the trucking industry.

The solution to humans being able to earn a living and remain productively & happily occupied is in the public ownership of the means of production. *No* not textbook communism - share holdings in companies (who deploy robotics and AI to displace human labour) along similar lines to the Vector/Entrust dividend payment in Auckland. UBI may also be necessary to displace traditional welfare support.

Without these developments the future looks terribly distopian - with a landlord / capital owning class who receives the revenue from the robots versus the unemployed mass (most of us) who can't afford to eat, let alone buy consumer products.

Indeed - without a more equitable ownership structure it is difficult to see how capitalism can survive without markets for the output of the production. Unless of course the robots consume all the output and the "biologicals" are no longer needed....

This can work for one major adjustment we need to make right now, if not sooner - population reduction.
And capitalism will have to go as well, especially the bit where you accumulate lots of capital, because in the new mechanized world, there will be little opportunity for the greatest majority of people to accumulate anything.

And capitalism will have to go as well

To be replaced with what? Be clear and specific.

An illustration, using taxi companies as my frinstance. In my youth, each town/city had its own small taxi company, maybe a few or more. Jump forward a few decades and you see something like Blue Bubble taking over, jump into the future and you have Uber all over the world, leaving no space for the small operator. Actually, capitalism under the future model will be taken from us, not by some socialist government by the giant corporations. Different means, same result.
The only solution to that is how the machinery and technology is owned.
People's enterprising nature will be turned to small cottage industries, art etc, but a UBI will probably be needed as well.

Everything dog has its day, if something becomes unsustainable it will be replaced. Just as there has been in the past, the future will present opportunities to the entrepreneurs amongst us.

And just as in the past is likely there will be a global population culling exercise, in one way or another! There were 3 billion of us crawling about the planet when I was born. Now there are nearly 8, soon to be 11.
Spanish 'Flu; Two World Wars of significance in our recent past; A Cambodia or two or three; a Cultural Revolution etc. and with Ebola and a revitalised AIDS etc lurking, something will cut us down to size. Then, those left with an entrepreneurial spirit might have a clearer field to play in. Until then, "10.8 billion" of us are going to have to adapt to a lower standard of living.....

Hardware Stores is another example. Literally every city or decent sized town has a Mitre 10 Mega. If someone were to leave school and decide they want to open up their own hardware store...good luck. Mitre 10 probably sell power tools (for a profit) at below what it would cost this person to buy from the distributor.

""On the macro level, politicians and business leaders need to recognize what is coming and what it will do to their voters, workers, customers, and shareholders."" My fear is that politicians and business leaders will continue to conspire - for example can either Nats or Labour say that low wage immigration was benefiting their voters? It did benefit businesses and political party donations. So are they likely to face down businesses wanting machines to replace workers?
Our best defense is to join a political party while they still prevent robots joining. Doesn't matter which party.

All this automation and yet we still have defence missiles taking out friendly aircraft and weapons designed to crush rebels,taking out schools and hospitals.We also have driverless cars that still need someone in the car.Me thinks time to go back to the drawing board.

I think you'll find in all those cases the weapons did exactly what they were told.. the human in the loop pointed them at the wrong thing.

Well if you're wondering 'how?' this might happen let me enlighten you.
It's not the rise of the robots that you have to worry about, it's the rise of the 'Digital Human', that's developing rapidly. Those annoying AI driven chat bots are getting more and more sophisticated and are starting to have a fully human looking interface.

There are now quite a few 'Digital Human' companies popping up and guess who is driving this tech, At the moment it's us and the Brits, if you don't believe me then take a look for yourself.

Kiwi AI Digital Human: https://www.faceme.com/

https://www.theguardian.com/money/2018/feb/21/natwest-bank-tests-cora-an...

Yep you really don't want to stay in any job related to Customer Sales, or anything to do with basic knowledge retrieval. Though it's not all bad news, I'm looking forward to the day when Real Estate Agents will be replaced by digital humans. That could be quite soon.

Then we really have to start thinking about the bigger picture for implementing the universal wage an living standards.

The universal wage will just be buying people capitalism doesn't need anymore, off. The carrot.

Same as my superannuation?

Haha, well said Lapun!

Look at it as guillotine insurance

IE, "I have no marketable skills and wasted my time at university, so I have a moral right to murder those that do unless they give me money for nothing".

Socialists, ladies and gentlemen.

Go study your history.

To play devils advocate, first it was powered looms, tractors then computers. All we’re going to take our jobs and fundamentally change society yet they only created more work. Why will AI be different. I often think it’s more fear of the unknown and not reflecting on history that causes such alarm.

Technology does change society.
Compare society before the spade and its equivalents with after: population density leading to towns and cities and kingdoms and armies and shorter and less pleasant lives with the majority serfs.
Compare before and after the railways - social mobility for all, no longer did most peole die within five miles of where they were born, move from the extended family to the nuclear society - so being a grandparent was no longer a purpose in life, leading to old people dying alone and unloved.
Compare before and after machines in the kitchen/laundry - women needing a job/career and great increase in marriage breakdown, women prime ministers and other examples of a vast change in society.

As Hariri points out successful technological innovation is good for Homo Sapien the species but not necessarily good for individual human beings. The promise of AI taking over moderately satisfying jobs such as reversing trucks or doing IRD returns may lead to happy people living meaningful artistic lives. Alternatively consider the experiments where an enclosed system provides limitless food and water on demand to a few rats - it ends up with wall to wall neurotic rats.

Hi Lapun. I agree more or less with everything your saying, in my mind I was more thinking more of the jobs side though not that I articulated that particularly well my apologies.
Technological advancements have lead to more jobs not less throughout history why will now be different was my question.
The societal change is a very worthy discussion as well. To give a counter point to your view, I think we do hold some responsibility for ourselves to look at and understand societal changes and how they affect us so we can adapt in a positive manner. This is not the full picture but as “change is the only constant” it is definitely valid.

Thanks for your comment. I wasn't disagreeing with you - some apparently dramatic technological changes have left society unchanged but others really changed society. The well known example is the washing machine being a bigger change to society than the PC or the mobile phone.
Note your "change is the only constant" would have made little sense for a million years until maybe Victorian England and even then the first time more than half the population lived in cities was near the end of Victorias life so the majority were farm labourers like their parents before them.

I’d never thought of the change being the only constant in that reference but very true and it’s only speeding up. Interesting times ahead!

"Why will now be different?" - because previous technological changes displaced labour not the brain.

How well did the industrial revolution work out for the horse?

The difference is AI is software, it can be replicated and distributed for next to nothing they only have to get it right once, rate of change is increasing while overall rate of growth is falling, if there is nothing to take the slack of displaced people there will be decline.

Hi helltoupee. I’m not disagreeing, what I’m getting it is more than half your comment could be said about previous events. Change increasing but growth decreasing is a differentiator but like the other changes mentioned, why will this lead to less employment/displacement. (I know there will be displacement in the short term, I’m referring to long term displacement)

Long term because too many will be displaced too quickly that you reach tipping point and economy gets into a self reinforcing downward trend. I work in IT we are constantly automating things not to allow us to do more but to do the same with less people, years of constant downsizing in a race to the bottom.

I agree with a critical mass theory, too many people displaced at once will cause issues. Will it happen like that though or will it be like your IT example where (I assume) it’s not all at once?

A race to the bottom is about producing a good or service at the lowest cost. It often gets a bad rap but it can allow more people to have access to things that raise their living standards. I think it would be easier to deal with joblessness than high cost of living and becoming less competitive in the world.

Oh and by the way. It's not just sales jobs that are also be effected by digital humans. If you're any aspiring fashion model you don't need to worry about being super skinny any more, since you can now be replaced by this chubby guy. Oh the irony.

BBC Article: Balmain: The 3D digital models taking the fashion industry by storm
https://www.bbc.com/news/av/technology-45426864/balmain-the-3d-digital-m...

Time will tell. In the overseas context its impossible to know just what kind of technology the global capitalist cabal have developed over the past half century or so since the intergrated microchip was invented, I think we only see glimpses of what has been acheived by what filters through into military and space applications that we see on the news...meanwhile here in NZ...earlier this week I watched 4 labourhire workers barrowing concrete all day on a residential house building site, from mixer truck at the roadside to the retaining walls at the back of the site, 75mtrs each way ALL DAY. 4 concrete deliveries so thats a lot of concrete and not a concrete pumping truck insight. If technology is about to snatch jobs then someone needs to tell the NZ construction industry because they are not in that loop!

With this downward pressure on wages for the few that have jobs, makes me wonder what this is going to do for inflation and interest rates.

And taxes and welfare.

With labour losing it's foothold as a major distributor of societal productivity I could see land tax being the best replacement. Also it could be used to fund a citizens dividend. It would also help to maintain your consumer base which would keep capitalism working. Look into Georgism.