By Scott Dennis September 13, 2016
“Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution…” –Stephen Hawking
There is a good chance that you are reading this article on a device that despite not existing just two decades ago you now find hard to live without. This technology gives you unparalleled access to a global market, a few clicks and your product is at the door in a few days or maybe a few hours; what could possibly be wrong with this level of convenience? Our culture is unique in that no group of human beings has ever had to cope with this level of social evolution brought on by technology, not even those who witnessed the dawn of the industrial revolution. Facing this reality many in the working class are instinctually asking, is the pace of change moving at the speed of progress or like a game of three card monte dealt out by sleight of hand?
A common graph used by economists when discussing the impact of automation on the working class looks very much like a fork in the road. It describes the labor force as being more productive yet receiving less wages relative to that productivity. The productivity line in the chart describes how efficiently anything coming to market is being produced, automation is key to making this output more streamlined when compared to the cost of production. The disconnect for workers is a how their take home pay and benefits do not grow and in many cases contract on average despite increasing revenues due to this improved productivity that they keep hearing about. This simple data set is the first step toward understanding what working class people in industrial societies are grappling with and how robots could be picking the forbidden fruit of human labor, their jobs.
Despite the massive implications of technological disruptions with the workforce and its secondary effects, the scholarly field studying this crisis is relatively small. These economists focused on working class issues are creating reliable mathematical models to understand the scope of technologies effect on labor. Leaders in the field such as Dr. Daron Acemoglu from MIT remind us that there have been many dire but incorrect predictions about technology creating widespread unemployment, beginning with Milton Keynes in 1930 and noted economic historian Robert Heilbroner in 1965.
There are many complex concepts employed in the economic research on this topic such as “Endogenous response of technology”, “Productivity Effects”, “Homotheticity” and the “Balanced growth path” (BGP) for the economy. The concept that working class people can be most concerned with is the ability of capital to create more highly skilled jobs when automation is introduced. Many of the models do prove that technology creates jobs loss and income inequality in the short run but that in the long run equilibrium returns due to the historic habit of new more complex tasks being created for workers, the point being that humans would have an advantage over technology in these cases. These studies also suggest that external pricing forces can slow down the need for capital investment in automation. In a recent paper Dr. Acemoglu states that “Under reasonable conditions, there exists a stable balance growth path in which the two types of innovations go hand in hand.”
The mission for an initiative like the Blue Collar Think Tank is to place a spotlight on this last point, are the working class living under “reasonable conditions?”
The connectivity to the market place that we all enjoy through our smart devices, puts enormous logistical pressure on the supply chain to work a smoothly as possible. There is a leaning toward optimization in this sector that acts as an example and cautionary tale for many other areas where labor still has a foothold. In the ports the changes are already taking place with automated container carriers and robot trucks that move cargo around the freight yard without the help of a longshoreman. Massive warehouses hum with activity twenty four hours a day with just a skeleton crew. How about your friendly neighborhood delivery man? There are robotics teams around the country that are very close to rolling out robots to replace them, that would equate to over half a million good paying jobs when one accounts for all the companies involved including the US Postal Service.
What new positions will be opening up to create the equilibrium predicted by many economic models when entire classes of labor are forever occupied by automatons
that require no sick time or maternity leave? This time predictions of wide spread unemployment may come to fruition because of two realities that did not exist in the past. First is the imbalance between stakeholders within today’s corporations, shareholders dominate the corporate landscape, labor holds few of the cards and most of their rights as employees have been stripped to increase profit margins. Secondly is the rise of artificial intelligence (A.I.), which is the game changer in terms of the theory of equilibrium being found in the creation of complicated tasks. Algorithms with ever increasing intelligence have the ability to tip the balance between labor and capital, supplanting an ever growing spectrum of job categories.
The good news is that technology is a tool that can only be as harmful or helpful as we allow it to be. Effective solutions begin with education of the workers affected by technological change. For every corporation involved with extensive automation labor leaders need to identify the managers or committee that make the decision on capital that can lead to automation running too far ahead of new job creation. In this era we cannot afford to wait for the market to create the change needed, working class strategies must be generated and implemented by policy makers working in the interest of citizens, not just corporations.
Scott Dennis writes for bluecollarthinktank and @bcthinktank