The New Class War

May 30, 2017

Previous | Next

Michael Lind, “The New Class War.” American Affairs, May 20, 2017.

Having just read Martin Ford’s The Rise of the Robots, with its very pessimistic outlook for American workers, I found Lind’s perspective to be an intriguing alternative. His article comes from what is for me an unlikely source. American Affairs is a new journal devoted to rethinking conservatism in the light of the Trump ascendancy. The way things are going, we may need another journal to make sense of a Trump descendancy. But let’s assume that at least some of what Trump represents may survive his mess of a presidency–in particular, his nationalistic concern about saving American jobs in an era of global competition. How will that impact the prevailing political ideologies?

Social class in the Cold War era

Unlike many mainstream conservatives, Lind is willing to acknowledge the reality of social class. Following scholars like James Burnham and John Kenneth Galbraith, Lind describes a “managerial elite” consisting of “private and public bureaucrats who run large national and global corporations and exercise disproportionate influence in politics and society.” This is a “mostly hereditary” class, since it draws its membership primarily from the children of the previous generation of the same elite. The class system has a semblance of meritocracy, since educational credentials are an important means of success, but access to the “right” education is itself very unevenly distributed.

As Galbraith argued, “countervailing power” can keep an elite from entirely having its way. This was especially true in the “golden age of capitalism from the 1940s to the 1970s, combining high growth with a more equal distribution of its rewards than has ever existed before or since.” In Lind’s view, the desire for national unity in the face of foreign threats was a major motivation for reaching a reasonable “settlement” of management and labor differences. Workers won the right to organize, more favorable wages and working conditions, and a stronger social safety net. The bargaining power of labor was strengthened by factors that kept the labor market tight, such as the immigration restrictions that had been passed in the 1920s, and the withdrawal of many women from the labor force at the end of World War II.

Multinational oligarchy and popular discontent

All of this changed after the breakup of the Soviet Union and the end of the Cold War. A new pattern of global production and corporate organization destroyed the existing accommodations between business and labor.

Through the empowerment of multinational corporations and the creation of transnational supply chains, managerial elites disempowered national labor and national governments and transferred political power from national legislatures to executive agencies, transnational bureaucracies, and treaty organizations. Freed from older constraints, the managerial minorities of Western nations have predictably run amok, using their near-monopoly of power and influence in all sectors–private, public, and nonprofit–to enact policies that advantage their members to the detriment of their fellow citizens.

Developed countries had long been accustomed to concentrations of economic power within domestic industries. Now those concentrations became more international, so that in many industries, a handful of giant companies controlled over half of the global market. While profits and managerial compensation soared, productivity slowed and wages stagnated. Lind believes that this was because transnational companies had other ways to pursue profits besides technology-driven productivity growth. It was easier to move factories from high-wage areas to lower-wage areas, or to take advantage of favorable tax policies. Apple not only made its iPhones in China, but channeled profits through Irish shell companies to shield billions from taxation. Transnational companies also worked to harmonize national laws in ways that favored capital, especially free trade agreements, while resisting efforts to set international standards for wages and working conditions or environmental protection.

Corporations that had to operate domestically were not as free to search the world for the cheapest labor or lowest taxes. But they did benefit from looser immigration policies that kept labor supply up and wages down in some markets. Marx had already argued in the nineteenth century that ethnic conflict divided labor and strengthened capital: “The ordinary English worker hates the Irish worker as a competitor who lowers his standard of life….His attitude towards him is much the same as that of the “poor whites” to the Negroes in the former slave states of the U.S.A….This antagonism is the secret by which the capitalist class maintains its power.”

As the income gap between the managerial class and the working class has widened, popular discontent has increased. But Lind does not think that populist movements alone will bring about very much change. Historically, oligarchies have usually been able to survive populist challenges. The populists have usually had to give up or sell out. In some places, such as the Deep South and much of Latin America, this pattern has repeated itself for a long time:

Most of the time, coteries within a nepotistic elite run things for the benefit of their class. Now and then, a charismatic populist arises, only to fail, sell out to the establishment, or establish a personal or dynastic political-economic racket. Formal democracy may survive, but its spirit has fled. No matter who wins, the insiders or outsiders, the majority will lose.

It is sobering to think that if we keep on as we are going, the country could deteriorate into a kind of banana republic with chronic and perhaps violent unrest and political repression.

Managerial elites are bound to dominate the economy and society of every modern nation. But if they are not checked, they will overreach and produce a populist backlash in proportion to their excess. By a misguided policy of suppressing wages and thus throttling mass consumption, unchecked managerial elites may inadvertently cripple the technology-driven productivity growth responsible for their rise….

This could even result in a more feudal type of society, in which the rich live off the “rents” from their accumulated wealth rather than creating new wealth by investing in higher productivity.

The multipolar challenge

So what would counteract the drift toward global oligarchy? Lind believes that peace among the international powers has been a necessary condition for managerial globalism. This has been the case “only in the decades immediately following the Cold War, when the United States was the ‘sole superpower’ and no credible ‘peer competitor’ had yet emerged.” But now, the rise of China and other powerful players may be a game-changer. Americans may have to rethink the idea that international boundaries no longer matter, and that the global economy benefits everybody in some kind of classless meritocracy. We must now ask tough questions about whether the cumulative effects of transnational capitalism on the United States are really in our national interest.

Lind sees the world becoming not borderless but multipolar, divided into several “great-power blocs,” most likely China, India, the US and Europe. Within each bloc, countries may trade very freely, but each bloc will need to be careful about giving up too much of its industrial capacity. On that may depend its ability not only to create new jobs and income, but to wage war. Strength, unity and internal harmony could become more prominent national values, as they were during the Cold War.

The elites may be too powerful to have much to fear from populism, but their division into competing power blocs may force them to fear one another. Policies that promote the wellbeing of business and labor as members of the same national team could have broad political appeal.

Unsatisfactory alternatives

Lind accepts part of Donald Trump’s critique of the United States, that we have let other countries produce too much of what we could have produced at home, creating unnecessary hardships for American workers. Our chronic trade deficit with countries like China and Germany is indeed a weakness, and their “parasitic export-oriented strategy” of development is better for them than it is for their debtors. Unlike Trump, however, he rejects the most conservative response, which he calls “radical renationalization” or “radical de-globalization.” He sees it as neither feasible nor desirable to retreat from the world by restricting the entry of foreign goods and forcing consumers to buy only what is produced at home. That would sacrifice the benefits of “supra-national economies of scale,” the efficiencies to be achieved by producing things for the largest possible market.

At the other extreme, Lind also rejects the idea that the ill effects of oligarchic globalization can be corrected by countervailing power exerted by global government, global labor unions, or other transnational institutions. He just doesn’t think that a multipolar world will produce the necessary degree of international cooperation. I thought that Lind was a little too dismissive there, since global agreements like the Paris Climate Accord may be needed, at least to address global emergencies.

A third unsatisfactory alternative is “neoliberalism plus”:

Neoliberalism plus, also called “inclusive capitalism,” is the preferred response of the transatlantic managerial class to the populist revolts in Europe and America. Essentially, neoliberalism plus is Reagan-Thatcher-Clinton-Blair neoliberalism with more subsidies to the “losers” of globalization. The disempowerment of non-elite citizens by the oligarchic capture of politics and the destruction of unions would not be altered. But the masses would be bribed into acquiescence by means of higher wage subsidies, like the Earned Income Tax Credit (EITC) in the United States, or perhaps a universal basic income providing every citizen a poverty wage.

That last measure is exactly what Martin Ford recommends in order to maintain the workers’ purchasing power as the robots take more and more of their jobs. Lind believes that such strategies will fail. As long as companies can rely on cheap labor at home or abroad, they do not need to invest much in new technologies. The full potential of those technologies cannot be realized, and the economy cannot generate the economic growth needed to pay for any new “bribes” for the masses.

I would only add that if “neoliberalism plus” is an inadequate solution, then “neoliberalism minus” is even worse. That may be a good term for the Congressional Republican agenda of more freedom and lower taxes for the elite, but benefit cuts for the struggling working class. That the President goes along with that strategy while claiming to champion the workers puts his presidency on very thin ice.

A “new developmentalism”

What Lind would like to see is a different strategy for national progress that he calls a “new developmentalism.” He describes it only in very general terms in this article. It would require new checks on the freedom of managerial elites, as well as a new “settlement” between business and labor for the sake of economic cooperation and national unity.

Lind wants great powers to compete in the global arena, but do it differently. I would describe what he wants as a “race to the top” instead of a “race to the bottom.” Public policy would discourage corporations engaged in international trade from seeking profits through lower wages and tax avoidance. For companies that operate domestically, it would encourage “tight labor markets for domestic service workers, achieved by immigration restriction, work-sharing, shorter workweeks, or other means.” High wages could boost productivity in two ways, by supporting the mass market for large-scale industries and encouraging labor-saving technologies, which themselves could be dynamic new industries. “If high wages lead to the replacement of fast-food workers by kiosks, the manufacture of the kiosks could become a new, capital-intensive, high-technology industry.”

Keeping labor markets tight and wages up, while at the same time investing in labor-saving technologies, sounds like a contradiction, and it requires a difficult balancing act. The key is productivity–using new technology not just to unemploy labor but to employ it more productively, so as to justify higher pay. That relates to what I wrote previously about favoring human-machine collaboration over the human replacement expected by Martin Ford. Replacement alone could destroy the working class and send the economy into a downward spiral.

The heart of Lind’s argument is perhaps best captured by this statement:

Great-power competition, even in the form of limited cold wars, is likely to reward nations whose economic model is based on developing productive technology and raising the incomes of domestic worker-consumers….In cold wars and trade wars, even if no blood is shed by the contenders, countries and blocs with empowered and patriotic workers are likely to do better than rival nations crippled by immiserated workforces and selfish, nepotistic, oligarchic elites.

The future may depend on how many of our leaders can figure this out.


Rise of the Robots (part 3)

May 24, 2017

Previous | Next

Because Ford’s book is focused on the loss of human jobs to robots, he has next to nothing to say about job creation. If, however, a higher level of intelligence enables human beings to do things that machines cannot, as Ford himself admits, maybe we can do more of those things as we turn over the narrower thinking tasks to the machines.

The personalized service frontier

If there is any new frontier in job creation that can escape the rise of the robots, I think it would be in the realm of personalized services, the least routine and predictable things we do. In fact, when a service professional is helping a client, the problem of predictability is compounded.  If you’re a legal professional, artificial intelligence systems that process information about laws, cases and legal documents will be a great help. But lawyers still have to apply the law to the unique circumstances of the client’s case, and that is a more creative task.

Similarly, thousands of students can listen to the same lecture online, but they need a creative teacher to engage with their particular thought processes as they struggle to reconcile new ideas with what they already think. That’s why many educators are talking about “flipping the classroom”–letting students gather more information online while changing the classroom from a lecture hall into a setting for more creative collaboration. If all that students know how to do is take in lectures and cough up the material for the test, they will be at risk of being replaced by a machine. We can give in to the machines, or accept the invitation to take education to a new level that requires smaller classes and more teachers.

In so many areas, people need more personalized services than they are getting. In addition to teachers and financial planners, they need mental health services, legal services, job training, drug treatment programs, child care, and of course affordable health care. The question is whether these services will remain scarce and expensive, or whether we can expand the market for them in the information economy.

Making services more economical

We can be fairly sure that many menial service jobs will eventually be more economically performed by robots than by humans. The days of supermarket checkout clerks are numbered. The problem for aspiring professors, counselors, financial planners, and so forth is a little different. It is not so much that robots will replace them, but that too few people will be able to afford their services, or that they themselves will not be able to afford the price of admission to their desired profession.

I can think of several ways that the information revolution could help. As automation lowers the cost of producing goods and routine services, people can spend a larger portion of their income on personalized services. And information technology should also save labor in the personalized services themselves, bringing costs down there as well. A lawyer assisted by artificial intelligence shouldn’t have to spend as long preparing a case. I know that as a financial planner assisted by sophisticated software, I was able to prepare a financial plan in a very reasonable amount of time and at a very modest cost. My plans always had a human element, with personalized commentary as well as machine-generated tables and charts, but the human-machine collaboration made the service more affordable for my clients.

The technology was also very affordable for me. I did have to rely on a financial software company that no doubt made more money than I did. Ford emphasizes the centralization of information capital, a situation in which a few companies controlling software and Big Data can dominate markets while employing very few workers. But there is another side to that. Information can be duplicated at a very low marginal cost. Software development may be costly, but as the cost is spread over more and more copies, the unit cost keeps shrinking. An aspiring financial planner or other service provider can subscribe to software support for a very modest annual fee. Such easy access to information capital should make it easier to create personalized service jobs.

A big price of admission to many service professions is the cost of education. Education is such a public good that its cost should be widely spread throughout society. Making students go heavily into debt in order to learn what they need in order to be contributing members of society is not a very sensible policy. Ford agrees, and he hopes that new technologies can reduce the cost of instruction. He seems less interested in expanding higher education, since he expects people at all levels of education to have trouble finding jobs. I am more interested in such expansion, because I believe that the jobs we can create will usually require more education than the jobs we destroy.

The role of the public sector

If we agree that education is a public good whose cost should be widely spread throughout society, that suggests a major role for the public sphere in making it more accessible and affordable. The same logic could be extended to other services. Services that contribute to the general health, education and welfare of the population constitute public goods that are worthy of some public funding. Not only do such services create jobs in themselves, but they can help people build their human capital and meet the demands of the advanced economy, keeping them one step ahead of the robots.

Ford isn’t very supportive of this kind of public funding. Here’s what he has to say about elder-care:

The main problem with elder-care robots as they exist today is that they really don’t do a whole lot….The realization of an affordable, multitasking elder-care robot that can autonomously assist people who are almost completely dependent on others probably remains far in the future….It might seem reasonable to expect that the looming shortage of nursing home workers and home health aids will, to a significant extent, offset any technology-driven job losses that occur in other sectors of the economy….[But] by the time the majority of older people reach the point where they need personal, daily assistance, relatively few are likely to have the private means to hire home health aids, even if the wages for these jobs continue to be very low. As a result, these will probably be quasi-government jobs funded by programs like Medicare or Medicaid and will therefore be viewed as more of a problem than a solution.

So here we have a valuable service that isn’t being provided either by robots or enough human workers, and yet Ford rejects the expenditure of more public money to fund it. Once again, that reveals his narrow focus on his recommended basic income guarantee to support consumption. In effect, he would rather have government pay people not to work than to work. We can find more work for robots, but not create more jobs for humans.

Public funding requires some form of taxation. Conservatives often oppose higher taxes, especially on the wealthy, on the grounds that they will interfere with investments by the “job creators” in economic growth. If capital should become as self-serving as Ford expects, with businesses increasing profits by destroying jobs rather than creating them, that argument should become less convincing. One wonders how high unemployment will have to go before people turn to the public sector for job creation, as they did in the 1930s.

A broader moral argument

Ford is concerned about growing inequality, and he does make the argument that as taxpayers who have supported basic technological research, people have a legitimate claim on technology’s benefits. I agree, but I would also ground popular rights in a more basic principle, the dignity of human labor. Let the machines do the work they can do better than people can. But respect people as more than just purchasers of what the machines provide. Help people be as creative as they can be as producers–paid and unpaid–as well as consumers.


Rise of the Robots (part 2)

May 23, 2017

Previous | Next

In Rise of the Robots, Martin Ford describes how smart machines are starting to replace human workers in more and more kinds of work, raising the threat of a “jobless future.” He sees no alternative but a government-guaranteed basic income to support the millions of people who will have trouble finding jobs.

Although I have described Ford’s outlook as bleak, I am not opposed to letting machines do the work they can do better and more efficiently than humans. Nor am I opposed to strengthening the social safety net to assist workers who are most hurt by this transformation. What I do want to suggest is that Ford’s focus on job destruction alone may miss some of the more positive possibilities of the information economy.

Where does displaced labor go?

In the late nineteenth and early twentieth centuries, the United States experienced a dramatic decline in farm jobs, as we transitioned from a predominantly agricultural society to an urban industrial society. That was a hardship for many former farmworkers, who had to move to the city and compete with other displaced workers for whatever wages they could get. The “Great Migration” of African Americans from the rural South and waves of mostly Southern and Eastern European immigrants heightened the competition and provoked racial and ethnic conflict.

Nevertheless, the situation did not result in protracted high unemployment. The expansion of manufacturing and service industries absorbed most of the displaced workers. In addition, a lot of human activity was shifted away from employment by shortening the work week, phasing out child labor, and encouraging retirement. The Fair Labor Standards Act of 1938 reduced the standard work week to 40 hours and established minimum wages and overtime pay for many workers. These measures distributed the available work more widely, while keeping incomes up. The expansion of leisure also helped create job opportunities in leisure industries such as travel.

Ford would say that the ways we have avoided high unemployment in the past are no longer relevant, since we now face worker displacement on a much larger scale. As an artificial intelligence expert, he is focused more on how machines will work than on how humans can create and distribute work for themselves. He is very imaginative when it comes to what robots might do, but less imaginative when it comes to how humans might adapt. He seems to be making a couple of simplifying assumptions: first, that there’s only a fixed amount of work to be done; and second, that whatever work remains for humans after the robots move in must be hogged by the few rather than shared by the many. If these assumptions are wrong, then the job outlook isn’t as bleak as he makes it out to be.

Will humans still work?

IBM used to have a slogan: “Machines should work; humans should think.” Now that the machines are getting smarter, that distinction is harder to defend. Martin Ford’s slogan might be: “Machines should work and think, and a lot of humans should just consume.”

That’s a little unfair however, since Ford himself acknowledges that computers think only in a very limited and specialized sense. “Even IBM’s Watson, perhaps the most impressive demonstration of machine intelligence to date, doesn’t come close to anything that might reasonably be compared to general, human-like intelligence. Indeed, outside the realm of science fiction, all functional artificial intelligence technology is, in fact, narrow AI.” Ford is also more reluctant than other computer scientists to assume that general machine intelligence is inevitable or even possible, or to speculate that robots will soon have the ability to rebel against their creators.

Some brilliant philosophers and scientists have questioned whether a dead machine could ever have the capabilities of any living organism, let alone a human one. (See, for example, Robert Rosen’s Life Itself.) Arguments for continuing to distinguish ourselves from machines are not confined to religious traditionalists or Cartesian dualists who look for an immaterial soul within an otherwise mechanical system. They are made by scientists like Stuart Kauffman, who have a less reductionist and mechanistic conception of nature itself.  Many thinkers reject the idea that the universe in general and human thought in particular is reducible to algorithm (computational procedure). Philosophers in the Whitehead tradition argue that each human experience is a unique creation that synthesizes a multitude of past experiences. We should be careful about extrapolating from what we know well–our own machines–to aspects of the natural world that remain deeply mysterious to us.

Granted that computers can simulate human work by detecting patterns in what humans have already done. That includes existing works of art. A computer has “already produced millions of unique compositions in the modernist classical style.” But humans invented that style by experiencing and expressing modernity. The human creative work is a synthesis and expression of lived experience. The machine simulation is a meaningless exercise because the dead machine has no lived experience to express.

Ford says that narrow intelligence is all that the machines need in order to do most human work, since “the tasks that occupy the majority of the workforce are, on some level, largely routine and predictable.” But maybe the reason why so many jobs have been routine and predictable is precisely because we haven’t had anyone besides humans to do the boring work until now. Now that we can automate more of what we’ve been doing, how do we know there isn’t some new frontier of creative activity for humans to explore?

The distribution of human work

Suppose Ford is correct that half of the existing work could be done by machines. We can still imagine the future economy in more than one way. At one extreme, half of the human workers keep their existing jobs, while the other half become unemployed. At the other extreme, the human work is distributed among the same number of human workers so that each works half as much as before. The benefits of the new technology are taken the same way they were in the twentieth century–in the form of higher productivity and more leisure.

Because Ford is focused on replacement of the human worker, he plays down the possibility of productive collaboration between human and machine. The machines are out to get your job, and if you work with them you will be helping them learn to do so. “If you find yourself working with, or under the direction of, a smart software system, it’s probably a pretty good bet that–whether you’re aware of it or not–you are also training the software to ultimately replace you.” But that is true only to the extent that the work is predictable, general intelligence is irrelevant, and the human touch is dispensable. Ford seems to vacillate between admitting that machines cannot do everything and talking as if they can.

A recent article in the New York Times was titled, “Meet the People Who Train the Robots (to Do Their Own Jobs).” It reported that some companies are asking their employees to train artificial intelligence systems to act more like humans. However, the workers who told their stories did not see their human role as very endangered. A travel agent who used A.I. to book hotels said, “It made me feel competitive, that I need to keep up and stay ahead of the A.I.”  Using the system “frees me up to do something creative.” A customer service rep who was training a system to answer customer questions said that “she doesn’t foresee a future where she’s out of a job. Too many questions still require a level of human intuition to know the appropriate answer. There are also times when rules need to be broken, like when customers ask for an extension on their account because of some circumstances beyond their control.” The executive who developed a system for searching and analyzing legal documents said that he “doesn’t think A.I. will put lawyers out of business, but it may change how they work and make money. The less time they need to spend reviewing contracts, the more time they can spend on, say, advisory work or litigation.” As for myself, I have been using technology all my professional life to become more creative and productive, and I have trouble imagining any occupation where such collaboration couldn’t occur.

If most occupations allow for both human and technological input, the benefits of that collaboration could appear in some combination of higher output and reduced work hours. As with the twentieth-century technological advances, many workers could produce more while working less, and that would spread the available work to more people. How exactly this would be accomplished in our time I don’t know. It probably would not be as simple as legislating a new standard work week. But if the alternative is mass unemployment and paying people not to work, I think society will find a way.

Productivity and income reconsidered

The potential for human-machine collaboration calls into question Ford’s most basic contention, that artificial intelligence is a worker replacement and not a tool for raising worker productivity. In the “golden age” of the American economy, “As the machines used in production improved, the productivity of the workers operating those machines likewise increased, making them more valuable and allowing them to demand higher wages.” But those days are gone, along with a big chunk of the labor force. Are they really, or is it that we have not yet seen the social changes that would translate new technological capacities into worker benefits? Perhaps we are living in a period like the 1920s, just after the introduction of the assembly line but before the New Deal regulated wages and hours and recognized labor’s right to organize.

I return to a fundamental economic problem I raised in the last post. If technology can make us richer in output, then why should people settle for being poorer in consumption? In Ford’s imagined world of massive unemployment, government taxes the winners to provide a basic income to the losers. In an alternative vision, workers are typically technologically assisted, highly productive, and employed fewer hours so that many can work. They can become better off in two ways: winning a fair share of the benefits of their own productivity, and consuming goods and services that have become less expensive. Recall that assembly-line technology led to both higher wages and less expensive cars, a win-win for ordinary people. As in the past people will have to fight for such gains, and they will have to use the tools of democracy to get government on their side.

Another possibility explored by some futurists, such as Jeremy Rifkin, is that people who spend less of their time in paid employment will use new technologies to create goods and services to share for free. (If you find that idea absurd, you can start paying me for my posts right now!) The abundance of goods and services produced in the “collaborative commons” could reduce people’s need for money, softening the economic impact from reducing paid work hours.

In my final post on this book, I’ll explore possibilities for creating new jobs that robots are unlikely to do.

Continued


Rise of the Robots

May 22, 2017

Previous | Next

Martin Ford. Rise of the Robots: Technology and the Threat of a Jobless Future. Philadelphia: Basic Books, 2015.

Here is a book whose title sums it up pretty well. The robots are coming to a workplace near you, and by the time they take over, a large portion of the workers will be out of a job. That may soon invalidate one of the cardinal assumptions of industrial capitalism, that people make a living through employment. How then will they live, and how will they continue to participate in economic consumption? In Ford’s view, millions will have to rely on a basic income guaranteed by the government. They will get “enough to get by, but not enough to be especially comfortable.”

I will say at the outset that I find this to be a pretty bleak vision of the future, although that in itself does not make it wrong. I will explore some doubts I have about Ford’s vision later. But first I’ll take a closer look at his argument.

The decline of the “golden age”

Once upon a time, back in the twentieth century, “the American economy was characterized by a seemingly perfect symbiosis between rapid technological progress and the welfare of the American workforce.” New technologies like the assembly line raised worker productivity, allowing for higher wages, higher spending, and higher demand for mass-produced goods and services. That kept the system going in a “virtuous feedback loop.” Ford makes the connection sound a little too technologically-determined and automatic for my taste, overlooking how hard workers had to fight to obtain a decent share of their rising output. Nevertheless, the country did finally achieve a positive connection between industrial technology and mass prosperity.

Ford believes that information technology breaks that connection. The new machines are not just tools that make workers more productive; they are potential replacements for the workers themselves. Robots empower capital (their owners), not labor. Ford sees evidence of this in a number of recent economic trends: Wages have been stagnating; labor’s share of national income has been declining; labor force participation has been falling; job creation has slowed to a crawl; income inequality has soared; and even college graduates are increasingly underemployed.

Other factors have aggravated the situation: offshoring of manufacturing jobs, growth of the financial sector and consumer debt, and political policies that favor capital over labor. But the development of information technology is the trend with the biggest potential to shape the future, because of its continuing exponential growth.

Automation and job destruction

Ford cites research to support the claim that “nearly 50 percent of jobs will ultimately be susceptible to full machine automation.”  Manufacturing jobs are prime candidates, but the transformation will hardly end there. In the more developed economies, automation will also overhaul the service sector, where most workers now work. Retail workers will be replaced by online sellers, intelligent vending machines, and robotic sales staffs. Robots will be preparing and serving fast food.

As the machines become smarter, they will threaten jobs up and down the job ladder. Ford does not expect that the workers displaced at the bottom will find expanding opportunities at some higher level, which was often the case in the last century. Instead he emphasizes the potential of smart machines to take over the more predictable tasks at many levels, including tasks that have required mental skills and a fair amount of education. Computers are now using vast amounts of data to make decisions, solve problems, and even to modify their own procedures through trial and error learning. They are helping to diagnose diseases, dispense pharmaceutical products, provide customer service, prepare financial plans, and serve as personal assistants to managers. That puts many white-collar jobs at risk.

The conventional wisdom that people can find jobs as long as they get a good education may no longer be true:

We are running up against a fundamental limit both in terms of the capabilities of the people being herded into colleges and the number of high-skill jobs that will be available for them if they manage to graduate. The problem is that the skills ladder is not really a ladder at all: it is a pyramid, and there is only so much room at the top….And because artificial intelligence applications are poised to increasingly encroach on more skilled occupations, even the safe area at the top of the pyramid is likely to contract over time.

Economic polarization

Economists have observed a process of “job market polarization” in which middle-class jobs are destroyed and replaced with “a combination of low-wage service jobs and high-skill, professional jobs that are generally unattainable for most of the workforce.” The automation of a middle-class job can save the employer more in wages than automation of a low-wage job. Eventually, automation will become cheap enough so that even workers who are willing to work for little may have trouble competing with the robots.

Ford expects the information economy to be largely a “winner-take-all” economy. Those who own and manage the robots will have a great advantage over workers who are competing for a dwindling supply of jobs. The winners will also include the companies that control the centralized computing hubs that provide data and software to the machines, as well as the principal producers of digital content for mass audiences. A few star performers can stream most of the music people want to listen to, and a few renowned scholars can stream online courses to masses of college students. The biggest losers will be those who can neither compete with nor find employment with the centralized providers of information.

As a software developer and expert on artificial intelligence, Ford is in the awkward position of both advancing the new technology and warning of its disruptive potential. His concerns about increasing economic polarization are both moral and practical. Since citizens as taxpayers have supported much of the basic research in information technology, they may have a legitimate claim on its benefits. And as a practical economic matter, a productive and innovative economy requires consumers with the purchasing power to buy the goods and services being produced. If automation breaks the link between production and consumption (robots produce, but people have to consume), how will the economy function to deliver products to consumers and buyers to sellers? “Continued progress depends on a vibrant market for future innovations–and that, in turn, requires a reasonable distribution of purchasing power.”

Ford suggests a thought experiment in which millions of workers are displaced, unemployment rises, wages fall, mass purchasing power declines, and mass-production industries fail. He also imagines, with the help of some science fiction writers, a “techno-feudal” scenario in which the economy is increasingly geared toward producing luxuries for the super-rich, who maintain a “robot-enforced tyranny” to keep the unemployed masses from overthrowing the system. It’s not a pretty picture.

A basic income guarantee

Ford’s main proposal for preventing such scenarios is a basic income guaranteed by the government. It would appeal to liberals on humanitarian and social justice grounds, and it would appeal to conservatives as a minimal intrusion by government into the market economy. It could be funded partly by eliminating other social programs, like food stamps and housing assistance. It could also pay for itself to a degree by promoting economic growth and tax revenue. It would be kept deliberately low, so that people unable to find work could meet their essential needs, while people able to work would still have an incentive to do so.

As Ford notes, proposals such as his have been around for a long time and have received support from liberals and conservatives alike, although never enough to be adopted in the United States. If high unemployment becomes as chronic as Ford expects, a strengthening of the social safety net along these lines might be necessary. But having said that, I am not sure that it is enough to relieve what is essentially a bleak view of our future. The economy he describes would still be polarized between winners and losers, with masses of the losers deprived of rewarding work.  The middle class would still be hollowed out, which many social analysts regard as bad news for democracy.

I also have questions about whether his proposal would even work to stabilize a highly automated economy. One thing that bothers me about Ford’s economic vision is that he never clearly says whether his future society will be richer or poorer in per-capita production and consumption. One would certainly hope that putting millions of smart machines to work would add to a country’s productive capacity. Why then should millions of people tolerate being reduced to a minimal income, especially if many of them are former middle-class workers who lost their jobs to machines? Even with Ford’s guaranteed income in the equation, falling incomes could fail to balance rising production, forcing society to give up much of the potential benefit of the technological revolution. There is also the political problem of how to contain the social dissatisfaction resulting from the gap between rising expectations and disappointing results, which brings us back to techno-feudalism and social repression.

With these concerns in mind, I will go on to ask whether the robotic revolution has some more positive possibilities that Ford may be overlooking.

Continued

 

 


Who Owns the Future?

June 12, 2014

Previous | Next

Jaron Lanier. 2013. Who Owns the Future? New York: Simon & Schuster.

Jaron Lanier is a heavyweight in computer science, who among other things had a lot to do with the creation and development of virtual reality. He is also an artist and musician, and a humanistic thinker who has thought deeply about the future of the information economy. I always find it hopeful when someone with impeccable technical credentials can avoid reducing everything to computation and elevating technology over people. Lanier is clearly fighting for human value in general, and human economic value in particular. The purpose of his book is to warn us that human value is being systematically undermined in the emerging information economy, and to consider what might be done about it.

I found Lanier’s writing brilliant but a little exasperating. He writes something like he thinks, no doubt, in short bursts of creativity that come at the problem from many different directions. He has thirty-two short chapters and eight “interludes,” many of which left me intrigued but wishing for more thorough explanation. To try and lay out his argument logically, I will have to pull it together from here and there rather than covering the book from start to finish. Still, you have to love a guy who can write, “Drawing the line between what we forfeit to calculation and what we reserve for the heroics of free will is the story of our time,” and, “The spiritual challenge will remain of not losing touch with that core of experience, that little something that doesn’t fit into the aspects of reality that can be digitized,” just to quote two of his insights.

The information revolution promises to be a great leap forward in human productivity. Why is it that the economic benefits are not more obvious then, at least to the majority of people in the most developed countries? Why are a relatively small number of people making so much money while the middle class is slowly shrinking? Lanier thinks that something has gone wrong:

PCs enabled millions of people to run their own affairs. The PC strengthened the middle class. Tablets are instead optimized for delivering entertainment, but the real problem is that you can’t use them without ceding information superiority to someone else.

The information economy has taken a turn for the worse as people have come to rely on a relatively small number of companies that owe their success to the collection of vast amounts of information. Lanier believes that we have made a bad bargain with these companies, giving them too much information and not getting enough in return. We are operating partly on the idea that information should be freely shared, and partly on the idea that information is economic power. The result is often that information freely shared by the many is gathered and used for profit by the few. He believes that an information economy run that way is ultimately unsustainable, since it will eventually destroy more income-generating activity than it creates.

Siren Servers

Lanier uses the term “Siren Server” to refer to “an elite computer, or coordinated collection of computers, on a network…Siren Servers gather data from the network, often without having to pay for it. The data is analyzed using the most powerful available computers, run by the very best available technical people. The results of the analysis are kept secret, but are used to manipulate the rest of the world to advantage.” The name, of course, is a reference to the mythological sirens who lured men to their death.

The information advantage can take many forms. More information helps an insurance company reduce risk by insuring only the healthy. More information helps Amazon automatically monitor book sales to make sure it is never undersold. More information helps Walmart calculate the lowest price it can get away with charging a supplier. More information helps an advertiser present just the right ad in the right place to induce you to click on it. Much of this may seem benign and even economically efficient. Customers get low prices and the free search engines to find them. But lower risk for those with the most information translates into higher risk for someone else, such as Walmart’s or Amazon’s suppliers. Instead of rewarding companies for taking risks, the information economy enables companies to earn the greatest rewards by using information to export risk to others.

Siren Servers lure customers with “rewarding network effects,” virtuous feedback cycles that make a company’s network more valuable as more people use it. The more people read Amazon books on their Kindle, the more publishers will put out Kindle editions. The more people using a matchmaking service, the better the chances of meeting someone you like, whether the matching algorithms actually work very well or not. But the most successful Siren Servers also hold onto their customers with punishing network effects that make it hard to leave, such as lost access to data. You don’t really own a copy of the Kindle book you “bought,” just the right to access it through a particular company.

Who will make a living?

The biggest threat from the information economy is that fewer people will be able to make a middle-class living. Lanier is by no means a Luddite who sees only the destructive impact of new technologies on work. He acknowledges that “up until about the turn of this century we didn’t need to worry about technological advancement devaluing people, because new technologies always created new kinds of jobs even as old ones were destroyed.” He is essentially an economic optimist who believes in economic growth through the creation of new wants and new value: “To lose trust in the basic inception of wealth is to lose trust in the idea of human improvement. If all the value that can be already is, then market dynamics can only be about churn, conflict, and accumulation. Static or contracting economies make people cruel and shortsighted.”

However, as the information economy has played out so far, the combination of free-flowing information and profitable consolidation of information by Siren Servers is threatening many middle-class jobs. A multitude of news,  books and music are available online, but newspapers are going bankrupt, bookstores are closing, and fewer people can make a living as journalists or musicians. And that’s only the beginning. Lanier sees online instruction as a real threat to the jobs of university professors. Publishing books online will become ever easier, but getting paid for it will be harder. Even health care workers could lose jobs to caregiving robots. “Eventually most productivity probably will become software-mediated.”

In Lanier’s view, the problem is not that humans have less to contribute, but that the human contribution is not being properly accounted for and compensated. “The most crucial quality of our response to very high- functioning machines, artificial intelligences and the like, is how we conceive of the things that the machines can’t do, and whether those tasks are considered real jobs for people or not.”

What people do

Lanier insists that smart technology depends ultimately on people. He says that “algorithms are only a repackaging of human effort.” The decisions of a caregiving robot will have to be based on the inputs of many humans making decisions in real situations. “The supposedly artificially intelligent result can be understood as a mash-up of what real people did before.” As smarter technologies increase our ability to implement our ideas, the ideas themselves will become more important than ever. Getting people to submit to surveillance and give up information for free will become more and more a matter of stealing human labor, a new form of economic exploitation.

The real problem is not human obsolescence, but a misguided philosophy that undervalues the human contribution. Or to be more precise, the contributions of most ordinary people. The same technological entrepreneurs who envision obsolescence for the masses regard themselves as Nietzschean heroes making their mark on the universe by using information collected from others. At times, Lanier refers to this as a new religion, a faith in technology and its wizards.

To put the argument very concisely, the information economy requires a more consistent association between information and economic value. Everyone must be able to receive compensation for the information they provide, and large companies must pay for the information from which they profit.

The more advanced technology becomes, the more all activity becomes mediated by information tools. Therefore, as our economy turns more fully into an information economy, it will only grow if more information is monetized, instead of less. That’s not what we’re doing….

Even the most successful players of the game are gradually undermining the core of their own wealth. Capitalism only works if there are enough successful people to be the customers. A market system can only be sustainable when the accounting is thorough enough to reflect where value comes from, which, I’ll demonstrate, is another way of saying that an information age middle class must come into being.

Continued