Why Robots Won’t Eat All the Jobs

This is probably a good time to say that I don’t believe “robots will eat all the jobs.” The preceding tweetstream was to extrapolate the idea out all the way, not to make the case that it’s what’s going to happen.

First, robots and AI are not nearly as powerful and sophisticated as I think people are starting to fear. Really. With my VC/tech hat on I wish they were, but they’re not. There are enormous gaps between what we want them to do and what they can do. So there is still an enormous gap between what many people do in jobs today and what robots and AI can replace, and will be for decades.

Second, even when robots and AI are far more powerful, there will still be many things that people can do that robots and AI can’t. Creativity, innovation, exploration, art, science, entertainment, caring for others… we have no idea how to make machines do these.

Third, when automation is abundant and cheap, human experiences become rare and valuable. It flows from our nature as human beings. Examples: Price of recorded music goes to zero; live touring business explodes. Price of drip coffee drops; handmade gourmet coffee grows. You see this effect throughout luxury goods markets, e.g. handmade high-end clothes. This will extend out to far more consumers in future.

Fourth, just as most of us today have jobs that weren’t even invented 100 years ago, the same will be true 100 years from now. We have no idea what the fields/industries/businesses/jobs of the future will be; we just know we will create an enormous # of them. If robots/AI replace people for many of the things we do today, the new fields we create will build on a huge number of people then available. People 50, 100, 150, 200 years ago would marvel at the jobs that exist today; the same will be true 50-100-150-200 years from now. To argue huge numbers of people will be available but we will find nothing for them (us) to do is to dramatically short human creativity.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15

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If Robots Eat Jobs, Then Products Get Cheaper

 photo credit: Mark Strozier - cc

photo credit: Mark Stroziercc

The necessary consequence of “robots eat all the jobs” is “everything gets really cheap.” The main reason to use robots instead of people to make something is when the robot can make it less expensively. When people can make something that costs less than what robots can make, then it makes economic sense to use people instead of robots. This is basic economic arbitrage at work.

It sounds like it must be a controversial claim but it’s simply following the economic logic. So “robots eat jobs in field X” = “products get cheaper in field X” = “consumer standard of living increase in field X” — necessarily. So arguing against “robots eat jobs” is equivalent to arguing “punish consumers with unnecessarily higher prices.”

Indeed, had robots/machines not eaten many jobs in agriculture and industry already, we would have a far lower standard of living today. Just as increases in consumer goods prices disproportionately hurt the poor, holding back on robots eating jobs would more hurt the poor.

The same logic applies to trade barriers (import tariffs): disproportionately hurt poor consumers by inflicting higher consumer goods prices. Here’s the arbitrage logic: Suppose humans make widget X profitably at $10 price to consumer. Robots can make X at $5 price to consumer. Economics drive X to be made entirely by robots; consumers win.

But then imagine the owner of the robots cranks X price to consumer to $20. Suddenly it’s profitable for humans to make X again; entrepreneurs immediately start companies to make X with humans for price $10 again. Therefore, with rare exceptions, there won’t be states where “robots eat jobs” and “products get more expensive.” They will almost always be cheaper.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13

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Imagine a World with No Physical Need Constraints

Thought experiment: Posit a world in which all material needs are provided for free, by robots and material synthesizers. Housing, energy, health care, food, transportation–> All delivered to everyone for $0, by machines. Zero jobs in those fields remaining. What would be the key characteristics of that world, and what would it be like to live in it?

First, it’s a consumer utopia: Everyone enjoys a standard of living that kings and Popes could have only dreamed. Fifth, all human time, labor, energy, ambition, and goals reorient to the intangibles: the big questions, the deep needs. Human nature expresses itself fully, for the first time in history.

Without physical need constraints, we will be whoever we want to be. The main fields of human endeavor will be culture, arts, sciences, creativity, philosophy, experimentation, exploration, adventure. Rather than nothing to do, we would have everything to do: curiosity, artistic and scientific creativity, new forms of status seeking (!).

Imagine six, or 10, billion people doing nothing but arts and sciences, culture and exploring and learning. What a world that would be. The problem seems unlikely to be that we’ll get there too fast. The problem seems likely to be that we’ll get there too slow.

Utopian fantasy you say? OK, so then what’s your preferred long-term state? What else should we be shooting for, if not this? Finally, note the “thought experiment” nature of this stream — this is an extrapolation of ideas, not a prediction for the next 50 years!

Clarification: I’m not talking about Marxism or communism, I’m talking about democratic capitalism to the Nth degree. I’m not postulating the end of money or competition or status seeking or will to power, rather the full extrapolation of each of those.

Source – Tweets: 1,2,3,4,5,6,7,8,9,10,11,12,13,14

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Human Potential

The flip side of the “robots eat all the jobs” theory not being discussed: The current revolution in the “means of production” going to everyone in the form of the smartphone (and tablet and PC) + mobile broadband + the Internet: Will be in almost everyone’s hands by 2020. Then everyone gets access to unlimited information, communication, education, access to markets, participate in global market economy.

This is not a world we have ever lived in: Historically most people in most places cut off from these things, usually to a high degree. It is hard to believe that the result will not be a widespread global unleashing of creativity, productivity, and human potential. It is hard to believe that people will get these capabilities and then come up with absolutely nothing useful to do with them.

And yet that is the subtext to the “this time is different” argument that there won’t be new ideas, fields, industries, businesses, jobs. In arguing this with an economist friend, the response was “But most people are like horses; they have only their manual labor to offer.” I don’t believe that, and I don’t want to live in a world in which that’s the case. I think people everywhere have far more potential.

Source: Tweets – 1,2,3,4,5,6,7,8,9

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Refuting the “Robots Eat All the Jobs” Theory

One of the most interesting topics in modern times is the “robots eat all the jobs” thesis; best book on topic: The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. The thesis is that computers can more and more substitute for human labor, thus displacing jobs and creating unemployment. At core, this is Luddism  — “lump of labor” fallacy, that there is a fixed amount of work to be done.

The counterargument is Milton Friedman: Human wants and needs are infinite; there is always more to do. 200 years of history confirms. To avoid the Luddite mistake, you must believe “this time is different”, that either (a) there won’t be new wants and needs (vs human nature), Or (b) It won’t matter that there are new wants and needs, most people won’t be able to adapt to contribute and have jobs in new fields.

While it is certainly true that technological change displaces current work and jobs, and that is a serious issue that must be addressed, it is equally true, and important, that the other result of each such change is a step function increase in consumer standards of living.

As consumers, we virtually never resist technology change that provides us with better products/services even when it costs jobs. Nor should we. This is how we build a better world, improve quality of life, better provide for our kids, solve fundamental problems.

Make no mistake, advocating slowing tech change to preserve jobs = advocating punishing consumers, stalling quality of life improvements.

So how then to best help individuals who are buffeted by producer-side technology change and lose jobs they wish they could keep? First, focus on increasing access to education and skill development — which itself will increasingly be delivered via technology.

Second, let markets work (voluntary contracts and trade) so that capital and labor can rapidly reallocate to create new fields and jobs.

Third, a vigorous social safety net so that people are not stranded and unable to provide for their families.

The loop closes as rapid technological productivity improvement and resulting economic growth make it easy to pay for safety net.

Source: Tweets – 1,2,3,4,5,6,7,8,9,10,11,12,13,14,15,16

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American Kids in the 19th Century

The Wild Children of Yesteryear

Outstanding piece in NYT on what American kids were like in the 19th century — eye opening:

“American children of the 19th century had a reputation. Returning British visitors reported on American kids who showed no respect, who swore and fought, who appeared — at age 10 — ‘calling for liquor at the bar, or puffing a cigar in the streets,’ as one wrote…

 

“There were really no children in 19th-century America, travelers often claimed, only “small stuck-up caricatures of men and women….

 

“The story of every 19th-century empire builder — Carnegie, Rockefeller, Vanderbilt — seems to begin with a striving 10-year-old. “

Source: Tweets – 1,2,3,4,5

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Lump of Labor Fallacy

Economists call it the ”lump of labor fallacy.” It’s the idea that there is a fixed amount of work to be done in the world, so any increase in the amount each worker can produce reduces the number of available jobs. (A famous example: those dire warnings in the 1950’s that automation would lead to mass unemployment.) As the derisive name suggests, it’s an idea economists view with contempt, yet the fallacy makes a comeback whenever the economy is sluggish.

– Paul Krugman in 2003 “Lumps of Labor

Source: Tweets – 1,2,3,4,5,6

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