The Economist: Coming to an office near you

[Felix]

http://www.economist.com/news/leaders/2 ... ntry-ready

Until now the jobs most vulnerable to machines were those that involved routine, repetitive tasks. But thanks to the exponential rise in processing power and the ubiquity of digitised information (“big data”), computers are increasingly able to perform complicated tasks more cheaply and effectively than people. Clever industrial robots can quickly “learn” a set of human actions. Services may be even more vulnerable. Computers can already detect intruders in a closed-circuit camera picture more reliably than a human can. By comparing reams of financial or biometric data, they can often diagnose fraud or illness more accurately than any number of accountants or doctors. One recent study by academics at Oxford University suggests that 47% of today’s jobs could be automated in the next two decades.

[Seneca]

The main way in which governments can help their people through this dislocation is through education systems. One of the reasons for the improvement in workers’ fortunes in the latter part of the Industrial Revolution was because schools were built to educate them—a dramatic change at the time. Now those schools themselves need to be changed, to foster the creativity that humans will need to set them apart from computers. There should be less rote-learning and more critical thinking. Technology itself will help, whether through MOOCs (massive open online courses) or even video games that simulate the skills needed for work.

That's my take on it.

[borisborisboris]

@Seneca, I like that take on it too. But, I would speculate that it might not be the full solution...

Thinking of the skills that would be needed to thrive in this new machine-oriented office - they tend to involve a lot of quantitative ability, maybe coding ability at some level (even if it's just massaging data in Excel or R), and the critical thinking skills to translate machine output into useful, actionable, implementable decisions. They also need intrinsic motivation that allows them to study and learn difficult technical concepts. The people who have all these things will be able to leverage the machines and become hugely productive, and everyone else will not.

This can be taught to some extent by education. But, picture the median person who is going to have their role made redundant in this new world (I am picturing the low and mid-level marketing analysts that I sometimes work with, and TFA mentions logistics). Do they fit the description above?

My guess is, given the current high wages earned by, like, Java developers or whatever, these types of people are relatively scarce. And in the future, the supply of them will increase a little bit with education, but not enough to keep pace with the increase in demand.

Moreover, trying to train up lots of people to become technically savvy to play with the machines could be wasteful, since lots of people might not be smart enough. Or, they will be smart enough, but not in the right way (high verbal / low quant ability won't cut it).

Tyler Cowen's latest book talks a lot about this.

So anyway, the government investment should be to make sure everyone with the ability to become very productive gets pulled into the system and is trained to do so. Then they need to think of a better way to distribute resources to the rest of the population, since labor will no longer be a very viable way of doing this. Basic income is one solution, albeit with its own drawbacks.

[Seneca]

...So anyway, the government investment should be to make sure everyone with the ability to become very productive gets pulled into the system and is trained to do so. Then they need to think of a better way to distribute resources to the rest of the population, since labor will no longer be a very viable way of doing this. Basic income is one solution, albeit with its own drawbacks.

The last time basic income was proposed seriously, Great Depression, we were in a transitional state as a nation. We did not do it, and while there were losers, not only did the US figure out how to employ all those unemployed men, but we also added women and minorities to the pool, while radically increasing productivity, by inventing some pretty amazing stuff.

Are there reasons to suspect this may not happen again? Yes.

Felix and I have debated this ad nauseum, and the reality is of course, both of us make worthy points.

I have argued against basic income from several different perspectives, but this article certainly brings up one of the key elements, capital is, and will be, increasingly mobile. Despite the notable recent efforts of western governments, particularly the US government, in trying to stop it. If they try too hard, Bitcoin is an early/archaic example of how easy it will be to simply work totally outside the system should one choose.

There are plenty of alternate solutions we could come up with to the basic income redistribution of resources by gunpoint and pain of gaol, if we think ultimately there will be less resources to share.

[Seneca]

One absolutely key point I forgot- my version of improving education is not limited to updating job skills.

[jacob]

The is the exact problem with the human species. A super strong athlete may be about 3 times stronger than the average person, whereas the weakest person may be 3 times weaker than the average person. This is a reasonable span and we can all empathize with each other.

When it comes to raw intelligence, the range between the strongest and the weakest increase, however.

When it comes to creativity, the range increases by an insane amount. A supercreative person can easily be a hundred times creative as an average person.

Same goes with interpersonal connections by the way.

Hence by creating the technology to leverage these talents, it's almost like creating an entirely different species. Imagine being able to lift weights a hundred times heavier than most people. How do you even deal with a society like that?

The answer is, in my opinion, certainly NOT more education. We already have the education there, so if the lack of education is the problem, why hasn't it been solved already.

I see two reasons:

It's because of the lack of social mobility (vast amounts of talents are lost due to the way we develop them ... e.g. athletes who are born in December are discarded by the process of winning that pairs people born in the same year). Similarly, in the US lack of educational opportunities for lower socioeconomic strata effectively shuts out, say 1/3 of the population. Sweden doesn't have this problem.

It's the lack of human talents. It's a problem with the gene pool. Humanity is simply not cut out for the technological world that <1% of the most creative human beings have figured out how to create.

In the latter case, the _wise_ solution would be to step back and deliberately choose not to replace certain human labors with machines just because we can. I say this under the assumption that "having something to do and being responsible for your life" is better for humans than simply giving them a check. Maybe I'm biased by right-wing values here ;-P

[Felix]

There are plenty of alternate solutions we could come up with to the basic income redistribution of resources by gunpoint and pain of gaol, if we think ultimately there will be less resources to share.

As I have repeated ad nauseam, all that is required to finance it is to stop some of the "redistribution of resources by gunpoint" already happening.

It's that curious argument that changing the system deliberately so it redistributes income upwards is freedom while changing it so it stops that is "redistribution of resources by gunpoint".

At some point we need to have a discussion on the "redistribution of resources by gunpoint" underlying the existing system you apparently consider to be so free of violence and gunpointing. (Ideally in a chat, it would drag on forever with no results in forum format. We both have a ton of posts to prove it. )

You've made me curious of alternative solution to reduce income inequality. What would you propose?

@jacob: Equating having a good life with being employed for a paycheck is a strange statement on a forum on early retirement, don't you think?

Why not just give them a check instead of going through the hassle of giving them some Keynesian job?

One could say basic income would help with the development of human talent via the "RICH economy" argument.

[Seneca]

You've made me curious of alternate solution to reduce income inequality. What would you propose?

I really don't care about income inequality, nor rate it as even a top 10 problem.

But, even if I did, I don't believe Basic Income would improve income inequality. Here's something I thought of during the recent middle class debate I think is related to the discussion.

If we define the problem as a permanent, systemic reduction in available jobs, we are going to have to have more unemployed. (whether we measure this by overall employment, or within certain employment cohorts, ie middle class factory workers) This I consider a problem.

What might happen if we encourage households to be dual income rather than single income?

If a single income household can just make it on the $40,000 median, their time needed for employment is essentially infinite- the economy needs to create and maintain this job forever. So we can crunch numbers, lets say he works 40 years, at 40 hours a week and retires to whatever crumbs the voters/SS Admin choose to give him. That's 1 job * 40 years * 50 workweeks/yr * 40 hours/workweek = 80,000 job-hours

Now. Lets get a second household wage earner in to the mix. Lets say they get equal pay and don't change lifestyle, and their tax rate doesn't go up (like it would now). They have a 50% savings rate, they invest the difference and get 6% returns...and, have the capital to retire in 10 years. 2 jobs * 10 years * 50 workweeks/yr * 40 hours/workweek = 40,000 job-hours to support this household for life. AND they are NOT reliant on the government and the voters.

The economy has to create half the job hours for them, and they have to sustain it over 1/4 the time. This makes their skills less likely to become worthless in their working lives, and our economy more able to quickly adapt to changing needs without displacing huge swaths of workers.

You can incentivize these behaviors easily. Basic education on money/capital, which you do not get in the US school system today. Tax shelters/benefits based on savings rate rather than consumption. You could even make savings rate a pyramid, save more, pay less tax. Offer corporate benes for employers that help dual working parents. Free daycare. If you don't trust individuals the government set up a program that manages these invested funds (and not in freaking treasury bonds and IOUs!!).

[jacob]

Dividends and capital gains are essentially a form of income distribution ... The best way to think of it is that revenue gets distributed into wages and earnings. Part of the earnings then go to dividends.

Early retirement is then a way of buying an income for those who can and choose to.

The problem with this is if there are no available jobs in the future for anyone but Java programmers. Then the majority of people will never have the money to buy into this capital-income distribution system.

You could hand out 10000 shares to every person, say. This would eliminate the problem with defined pensions which lock in the future at a nominal return rate which reality can't meet. A market based equity model would move this risk from the government to the end user.

Essentially, what we're undergoing is that companies are figuring out, thanks to the crisis, that, hey, they're actually fine without labor. This is why profit margins are so high. Unfortunately, high profit margins are followed by low revenues because profits aren't redistributed to the consumers (most consumers don't own much equity), which leads the market to tank for years.

Therefore, the investment model is broken unless everybody can find a way to own equity. And they can't given that they have no way to earn it in the future.

[slowth]

In the latter case, the _wise_ solution would be to step back and deliberately choose not to replace certain human labors with machines just because we can.

Ellul's The Technological Society shows this is impossible. I agree it would be a great solution, but this society will not allow it.

[henrik]

Basic income via dividend shares, interesting idea...