Automation, Robots and the Disappearing Worker October 2, 2013 11 Comments Share tweet Chi Ling Chan Columnist By: Chi Ling Chan | Columnist Days ago, I came upon a letter sent to The Economist, written by a jobless man whose desperation is hard to miss: “I am young and unemployed and face a lifetime on the dole. Why? This morning I collected my jobseekers allowance from my bank, where I have it paid directly into my account. I did not see a cashier, but withdrew money from a cash point. Then I went to the supermarket… I scanned the items at a self-serve till, no need for a check-out assistant. I went home, switched on my Chinese computer and applied for jobs online. I do not send letters through the post; e-mail is more convenient. I then shopped online, I rarely use local shops. Who can I blame for the lack of jobs?” A century ago, the same question had been on the minds of a group of workers in Yorkshire, Lancashire and Nottingham. In an act of rebellion, they took it out on spinning jennies and power looms, smashing the machines that had left low-skilled, low-wage laborers without work. Posterity calls them “Luddites,” a word that is today synonymous with being an old fuddy-duddy, decidedly anti-technology and anti-progress. In Stanford and in Silicon Valley especially, being labeled a Luddite is almost tantamount to being sent into exile. After all, who can be anti-technology in the heart of techie paradise? Yet slapping the luddite label on the unemployed does not make the problem go away. Being so close to Silicon Valley, we see technological progress creating a seemingly endless stream of lucrative jobs; what we don’t see, however, is how it is also eliminating other types of jobs and leaving the typical worker worse off than before. There is no doubt, for one, that workers are increasingly being squeezed out by robots and automation. And we’re not talking only about jobs at the lowest end of the pay scale– what were once considered “middle-class” jobs are also being hollowed out as your property agent gives way to mobile applications like Airbnb and Trulia and your baggage check-in staff at the airport are replaced by self check-in kiosks. With the advent of MOOCs, community college lecturers might in time find themselves confronting superstar lecturers who put their own necessity into question. Today, a whole class of workers is being rendered irrelevant as technology like the Internet, big data and artificial intelligence are automating many routine tasks. It’s not as simple as robots replacing workers– digital processes are creating new processes that enable us to do more with fewer people and making human jobs obsolete at a faster pace the skills and organizations can catch up. Under such circumstances, the market does what it does best: It rewards whoever adds the greatest economic value captured by the price mechanism. And they are, inescapably, owners of capital and machines that bring about greater productivity and profits. With capital-based technological change comes a notable shift in income away from labor: in the United States, the share of compensation in gross domestic income is at a 60-year low, and the share of middle-class income has fallen from 62 percent in the 1980s to 45 percent today. Wither the American dream– there is probably no worse time to be a worker with no special skills. Who is to be blamed? The popular rejoinder proffered by governments all over has been uniformly disingenuous: market forces. The inexorable forces of market competition, so the story goes, has led to innovations that increase productivity, and international trade has put downward pressures on wages. For many governments, especially those insisting on welfare minimalism, the sole corrective has been to promote labor productivity: The onus is always on the workers to play catch-up with the robots. But increasingly this is not going to work, because better education will not do much to increase incomes or reduce inequality as long as productivity increases of the machines outpace that of the worker– which it most certainly will. “Market forces” is a convenient scapegoat because, being sufficiently nebulous, it doesn’t hold anyone responsible and creates the illusion that the plight of the middle-class is ‘inevitable’ in the face of unstoppable technological advancements and globalization. But if it is true that automation is efficient, it is simply untrue that it got there because of the market. Much of the most important innovations were a result of public sector investment. Silicon Valley, for example, did not come about through private capital– before there was Silicon Valley there was Microwave Valley, which was essentially a federal project specializing in electronic intelligence for CIA and the military. Stanford had research labs working for the CIA, and several engineering doctoral theses were actually classified. Before Google and Facebook became poster children for Silicon Valley, the largest employer in the valley had been Lockheed Martin. In short, what is now the world’s hotbed of innovation once started out as Uncle Sam’s experiment. If Silicon Valley and all the technological disruptions that have made less-skilled workers obsolete is a result of government-driven market distortion, then the hollowing out of the middle class is a failure of government, not “technology” or “market forces”. Luddites past and present are not anti-technology in the abstract– rather, the real struggle is against the restructuring of social relations at their expense. Historically, technology both creates and destroys jobs; increasingly, though, the costs of technological transitions are going to fall on the workers and the less skilled. It is no coincidence that the United States is seeing a more unequal distribution of wealth despite tremendous increases in economic productivity. For governments and technological optimists (which we have no lack of in Stanford) alike, there is a need to re-visit the assumption that technological progress is a good in and of itself that can be allowed to eclipse notions of fairness and social betterment. Contact Chi Ling Chan at email@example.com Airbnb disruption disruptive innovation economics labor market forces Silicon Valley Technology Trulia workers 2013-10-02 Chi Ling Chan October 2, 2013 11 Comments Share tweet Subscribe Click here to subscribe to our daily newsletter of top headlines.