Self-driving trucks threaten one of America's top blue-collar jobs
latimes.com
latimes.com
This is a major point of automation. Yes, many jobs will be lost. But the prices of many goods will decrease.
The problem is that the current transition threatens to be so rapid as to seriously disrupt society. Perhaps new jobs will eventually be created to make up for those lost to automation (or perhaps not), but they won't be created fast enough to avoid the pain of all the rapid job losses that are coming.
Thankfully, society seems to be coming around to the idea that resistance is futile, and we need to address this problem before it becomes too overwhelming. Personally, I feel one of the most realistic options would be to reduce the standard work week to 4 days and/or 30 hours. People need to be kept busy, or society overall tends to start to crumble around the edges. This would mean people will need to shift their perspective on income, as it will likely be reduced. But this shouldn't be too bad, since all the automation will likely lead to reduced prices all around. Reducing your income by 25% may sound bad, but if practically everything becomes ~20-30% cheaper then you should have essentially the same standard of living, but with fewer working hours. Isn't that what we more or less would all like?
No matter what we wind up doing however, chances are there will be some period of difficult transition. All we can hope to do is make it as short and relatively painless as possible.
> Yes, many jobs will be lost. But the prices of many goods will decrease.
If you're talking about what I first thought of, which is things like groceries, housewares, the "every day things" that we all buy and consume without really thinking, I'm not sure that A: The prices on these items could go much lower than they already are and remain profitable, or B: That the producers of said goods (majority MASSIVE corporations with impressive names and product rosters, and the most likely early adopters of this technology) would reduce the prices in accordance with the reduction in cost. The trend now among these companies seems to be to squeeze every last cent out of every last consumer, and if you're proposing to your given board of directors to buy all these new trucks (or change contracts to a company that has) why would you then cut the prices?
I would hope there would be market pressure to do so from at least one good actor, but I don't know how certain that is at all.
This is the wrong analysis. Price of goods is say, (Supplier Cost)+(Transit to Store)+(Profit Margin)=MSRP
You're saying that MSRP can't go down without hurting Profit Margin.
He's saying, Transit to Store will decrease, allowing MSRP to decrease without affecting Supplier Cost or Profit Margin. (Or Profit Margin can increase while MSRP remains the same)
Healthcare is expensive. Education is expensive. Land (in some places) is expensive. But man stuff. Stuff is cheap.
http://www.ers.usda.gov/data-products/chart-gallery/detail.a...
Similarly, if Apple could reduce its shipping costs to near zero by teleporting the raw materials to Foxconn and then teleporting the finished goods directly to retail outlets, they'd still charge $600 per iPhone, even though they have competition from other phone makers in the form of Android.
The Invisible Hand doesn't always work the way it did in Adam Smith's time.
Capitalism has a tendency to optimize for a monopoly.
Even if prices were lowered by a few percent for some goods thanks to cheaper shipping, that's little help when you have no source of income. This will only exacerbate the demand-limited economic slump we're currently experiencing.
1) Challenges that come about due to an aging population
2) An overall slow down in innovation (Cowen's "Great Stagnation" hypothesis)
Innovation is slowing down because companies are preoccupied with irrationally slashing labor expenses, and R&D tends to be quite expensive so it gets cut significantly. The result is less income for consumers, who in turn buy fewer goods, which ultimately leads to even more cuts for labor.
But you are right that it would increase economic inequality.
The only reason self driving tech won't be commoditized will be regulatory barriers. You can imagine why entrenched interests would lobby for such.
If there is competition, then it is true that driving down food/commodities prices will create value for lower income households. But a solid portion of that value will still accrue to the companies running the transit networks using fewer people.
Google has spent years trying to enter the field of self-driving cars. So has Uber. Would not the inherent difficulty they are encountering be a barrier to entry.
I'm not arguing for throwing regulations around willy-nilly. I'm not arguing for regulations at all. I don't know enough to do that with any confidence. I'm just saying that in asking the question "Should we use the force of the state to handle some of the effects of this?", the probability of this increasing income inequality is worthy of serious consideration.
From an epistemological perspective no one does. No one person in this world contains the knowledge needed to manufacture a modern day pencil from scratch.
I don't think the term "income inequality" accurately describes the problem. Someone growing richer doesn't mean someone else had to become poorer. The problem more accurately is that poor people are poor.
In the beginning. Then due to economy of scale (and government regulations), it will be controlled by two huge companies, owning all IP, making any inroads close to impossible.
Think of when the newest major computer manufacturer was founded.
How would one of the conglomerates stop that besides competing on price or erecting regulatory barriers?
It's a commodity market (so little "customizing" benefit), crazy IP with feedback loop (Google and Tesla have more street data than anyone else, so they can perfect their algorithms. As their algorithms are better than anyone else's, people buy there hardware, which gives them more data, ad infinitum. Breaking into such a market will be getting harder and harder for that reason), and quite likely some kind of (strict but bureaucratic) safety regulation.
If companies could squeeze more money out of customers why wouldn't they just do so right now by raising prices?
They only have to keep prices the same or negligibly lower in order to profit from this proposal.
Personally, I imagine a lot of companies will use that extra money to buy out, take over, or otherwise eliminate their competition. I doubt the consumer will win.
Really, anytime a major player has cash on hand, they're going to buy out competition, either through acquisition or buying an equivalent product. When Oracle had liquid assets, they buy Sun. ATT and Verizon consolidated the cell phone market down to ATT and Verizon (and even attempt to merge down one step further). DeBeers buys every diamond producer on the market.
And so long as the cost to get into the industry is high (the up-front cost of a driver is effectively 0, whereas AI will be non-0), and the incumbents have the ability to drop their prices lower than any new startup (thanks to the efficiencies of scale), serious new competition will be rare.
Even considering all that, the cost for shipping something is remarkably low to begin with. $400 for an 40' shipping container worth of goods over 300 miles? Drop the driver from the equation entirely, and that cost would only go down by about $100. As a point of reference, a 40' shipping container full of bananas is worth in excess of $58,000 (1000 boxes per container, 100 bananas per box, $0.58 per banana).
Such is the nature of competition, and one of the basic reasons why it works. Frankly, I'm surprised it still needs to be explained.
Do we see massive price drops whenever any company outsources their call centre to India? Nope, the price stays the same and the execs pocket the difference in bonuses.
This only works if the seller has monopoly pricing power. Otherwise gas would be $5/gallon all the time.
Do we see massive price drops whenever any company outsources their call centre to India?
Massive, no, but the prices of most things other than housing, health care, and education have in fact been dropping.
Only to the extent they are resistant to market forces.
This remains to be seen. When corporations find ways to cut costs this typically results in higher profits (which there's nothing wrong with that per se) with consumers maybe seeing some cost reduction but not necessarily. Outsourcing of manufacturing jobs is a prime example of that.
Yes, and if our billionaire overlords are feeling generous, perhaps some of those savings will "trickle down" to us peasants.
But probably not...
1) One company develops and ships a working autonomous truck. They start selling to shipping companies, or roll their own. 2) The truck client/shipping company starts competing with other shipping companies by offering vastly lower prices on the same shipping. 3) Retailers flock to the automated shipping company because they're vastly cheaper. The first retailer to move and contract with them enjoys a brief competitive advantage over other companies by cutting retail prices slightly and gaining a market advantage. Eventually, other shipping firms pop up to service the other retailers' need for competitively priced trucking. 4) Supply of automated trucking catches up with retailer demand. Retailers are forced to, again, compete directly with one another on price for the same goods, but now the overhead of paying humans to manage shipping is gone.
The doom and gloom comments about overcharging for products is a little ridiculous, IMO. Uber, Apple, Amazon, and Google are at each other's fucking throats for market share in this space. You bet your ass they'd fight tooth and nail with one another on price.
A hundred years ago 'horseless carriages' replaced a lot of horses, and in the next couple decades we're going to see 'driverless trucks' are going to replace a lot of humans.
Has anybody tried to do some kind of study/educated guess about this impact?
At the end of the day, while robots can do our jobs better than we do, they can't consume stuff better than we do, and ultimately our consumption of stuff is what creates the jobs the robots are taking over.
With jobs even as "safe" as surgeons potentially under threat, how long before everyone is in trouble?
In the not-so-distant future, nearly all jobs will be programming jobs. That or shaking hands and smiling.
With a rising share of income going to robots (capital) rather than humans (labor), there needs to be a stronger social safety net. This means guaranteed health insurance, health care, retirement benefits, and even a minimum income.
That safety net will have to be paid for via some combination of taxes on wealth, profits, and investment income.
I guess a country could always wage war against another and take their resources or enslave their people.
Is that the ultimate outcome?
Not trying to stir politics here, just to find the theoretical limit of an economy where all actors can be automated.
You are confusing money with wealth (stuff people want). The money would come from the government, which can simply print it.
Take a hypothetical situation where robots cause the total amount of wealth (stuff) created, in one year, to increase by 100%. Now assume the government prints enough money to increase the total amount of money by 100%. In this case, wealth has increased by 100%, and money has increased by 100%, so people's ability to get stuff has increased 100%, with 0% inflation.
In the real world, things never work out so cleanly, but the above offers a simplified model of what could happen.
Robots do things cheaper. This allows prices to fall.
Also, if a business has nobody to sell to, then they themselves are in trouble. That they remain profitable is a sign that things are fine.
Humans are adaptable creatures and we find other things of value to do.
People from some industries will experience short-term pain. But pre-empting that with politics runs the risk of creating socioeconomic cruft that unnecessarily and inefficiently drains more resources in the long run.
I don't think everyone--in this time or others--would agree with this. I certainly don't believe in being "better off", I think that's an illusion born out of minimization of our greatest fears. Just because you aren't about to die of tetanus does not mean your quality of life has improve at all.
I do. Archeological evidence of American colonists' bones reveal that they worked extremely hard and died young. Look at their clothes in a museum - they look like childrens' sizes. Look at their teeth in bones in museums. Do you prefer teeth like that?
I can buy an orange any day of the year. I have hot/cold running water. I'm warm in winter. I have clean water to drink. I have ice cream in the summer. I have endless entertainment at the push of a button. I can talk at any time to any family/friend anywhere in the world at my whim.
I'd probably be dead by my age if I lived 200 years ago.
I really should have framed my example in terms of happiness rather than quality of life.
I have asthma and require corrective lenses. My quality of life is orders of magnitude better now than it would have been even 100 years ago.
Disease is unfortunate. So is the destruction of our earth. The people dearest to me live thousands of miles apart and talk to me through Facebook. That too is unfortunate.
I simply wish i could dictate the terms of my lifestyle and I cannot. I understand most do not grapple with this problem.
Also, my grandparents came from families with 8 or more children, and many of them died as children. This was normal for those days.
You are expanding upon my example without explaining it. My point remains: has the standard of living gone up? If people could do productive work at the age of 10, but now they have to wait till they are 25, then what metric do you use to prove that the standard of living has gone up? If you want to argue that leisure has expanded, can you prove that the expansion of leisure is entirely experienced as a positive thing? Are young men happier now that they can't find good paying work till they are in their late 20s, rather than finding such work in their late teens?
It remains true that it was easier to raise children 100 years ago than it is now. Is there a metric that shows this as a decline in the standard of living?
My point is that there is a lot that is left out of these metrics. A simplistic look at median wage and the Consumer Price Index suggests that the male median wage peaked in 1973 and family income peaked in 1999. But if you were to measure those factors that are specific to raising a family, the decline in the standard of living, for families, would show up earlier than 1999.
As to the "half the children died" argument, the steepest part of the decline in childhood death was 1850 to 1900. Of the 16 children my great grandmother gave birth to, 15 lived till at least their 18th birthday.
> what metric do you use to prove that the standard of living has gone up?
Average height, longevity, infant mortality are good proxies. Median wage doesn't mean much as it doesn't say what you can buy with it.
Have you ever been to Disneyland? Yellowstone? Traveled internationally? Only the rich could do that in 1900. People didn't even brush their teeth until after WW1. Few my age would have any teeth.
No birth control, no living together before marriage. Would you be happier with that?
No radio, no TV, no Hackernews, no movies, no stereo, no Beatles, no disco (!), are you sure you want all that?
Your point about polio is bizarre, as it was never the dominant factor in childhood mortality. The steepest decline in childhood mortality was during the period from 1850 to 1900.
You want to believe things are worse in America, I can't change your mind. In my own lifetime things have gotten visibly better. My father lived into his 90s, and he'd recount how things have gotten quite a bit better. Sure that's anecdotal, but you can look up statistics, too.
A "bunch of neat stuff" does improve standard of living. I'm almost never bored, for example.
We can easily list cool stuff that happened over the last 100 years: radio, television, cell phones, the Internet.
We can easily list bad stuff that happened over the last 100 years: environmental degradation, global warming, the increase in the percentage of income spent on transportation, difficulties in raising children.
What do we get when we subtract the bad stuff from the good stuff? Until we have good metrics for doing that, we are like the CFO who confuses gross revenue with net profit.
[1] https://www.amazon.co.uk/Box-Shipping-Container-Smaller-Econ...
Slowly humans will fade completely from the picture, but it will not be a hard cut. Also, we are far away from auto-fixing trucks. So at least the repair crews will stay for long while.
Democratic capitalism has to get this isht figured out, or the next century is going to be unpleasant.
I imagine you'll see a lot of hybridization of activities before (or if) you see the elimination of the human- such as a human riding "shotgun" and dealing with any issues or activities that arise when the truck is stopped, or where you see more humans employed in servicing and response roles.
That being said, hauling shipping containers around the port of long beach is probably on its way out. I feel for those drivers.
Every time I take an Uber now, I wonder if the driver realizes that his job will most likely be automated away in a couple of years.
Mining companies in Australia are already using self-driving trucks to transport ore.
http://www.businessinsider.com/rio-tinto-using-self-driving-...
And self-driving cars are just around the corner in the USA. Trucks will follow maybe half a decade after that, at most.
It also seems to me that such things won't be a big deal. Some Google demo shows their system recognizing a bicyclist making a hand signal. It's the dynamic traffic stuff that will take longer to deal with.
I was thinking about one problem the autonomous systems will have to handle on my run yesterday; pedestrians can look at drivers and use eye contact to make sure the driver has noticed them. An autonomous system doesn't have eyes to look at. The first idea I came up with was a highly directional light source that the system could point at the system could point at the heads of pedestrians it had recognized. Not a laser, but a moderately bright light in a recess that limits the direct visibility of the source.
(Yeah, yeah, I know about the kilometre long Australian semi-trailer trucks, but those aren't really practical in most situations...)
(They are still really imposing and impressive, especially at night. On the extremely flat, straight desert roads in the Outback, you can see them miles before they arrive, like a star on the horizon. When they finally get to where you are, they fly by with a hefty gust of wind. They have steel "roo bars" mounted on the front for efficiently generating roadkill. They are loud, brightly lit, and more than half a football field long.)
When the automobile was invented think of all the farriers and hay people that went out of business and had to move on.
Think about the milkman or the guy that used to put ice in the back of your ice-chest out in the back yard.
When we eventually move off coal, think of all the millions of people involved in the coal industry that will be out of work.
Those lay-offs are a good thing, and we should be doing everything we can do expedite the process.
Of course for individuals in an industry that will be soon redundant it sucks, but that's the nature of life. Move on, adapt, re-train. Job security was fleeting in the 70s and 80s. It's not real anymore.
Fun story, the word luddite comes from Ned Ludd, an 18th century English weaver. He destroyed some mechanical looms and inspired a bunch of people to copy him. They were angry about automation taking their jobs.
This is a timeless problem.
> Of course for individuals in an industry that will be soon redundant it sucks, but that's the nature of life. Move on, adapt, re-train.
You're gonna need more empathy than that. For someone like a 50-year-old coal miner living in Kentucky, "adapt, retrain" is easier said than done.
It shouldn't be a matter of holding on to the jobs, it should be about helping people transition to new jobs.
The industrial revolution was amazing and wonderful, but for the people who get caught under the wheels, who didn't know how to adapt, it was nothing but pain.
Here is a poem to illustrate what I mean: https://www.poetryfoundation.org/poems-and-poets/poems/detai...
For self-driving vehicles, I suspect the window of time between "commercially viable" and "common" is a few years, ten if we want to be pessimistic.
So will society (jobs, infrastructure, etc) adjust quickly enough to absorb this change without major pain?
I don't know but since we know it's going to happen, I think we should push the conversation towards "what's next" and figure out how to help people get there instead of just lamenting the loss or complaining about the lament.
http://www.eia.gov/todayinenergy/detail.cfm?id=19271
https://en.wikipedia.org/wiki/Coal_mining_in_the_United_Stat...
I guess lots of the 120,000 work at smaller gas plants.
There's ~1.6 million people directly employed as truck drivers.
If a 35-year old coal miner has bought a house with a middle-class income and suddenly gets laid off, he could be in that shelter within a year. That is why people are so concerned with holding on to jobs.
Automation eventually leads to a rise in productivity and living standards for future generations. The typical truck driver won't get to reap any of the benefits from the transition.
Sympathy for the Luddites[1] lays out a convincing argument for what actually happens when these jobs disappear.
[1]: http://www.nytimes.com/2013/06/14/opinion/krugman-sympathy-f...
I used to make this argument, but I don't really agree with it anymore. In the past, there was significantly more on-the-job training and even people with a high school education could get fairly good jobs with the possibility of meaningful career advancement. That doesn't seem to be the case anymore, and it seems like most of the jobs that are lost due to free trade and automation result in workers that, at best, have primarily service jobs available to them that offer little possibility for advancement. Economists predicted that those displaced workers would increase their educational level and retrain, but in practice that did not happen either because people are unable or unwilling. At least part of this must be because in the past, on-the-job training was much more common than today.
See this article in the Economist: http://www.economist.com/news/united-states/21695855-america...
Here are some relevant paragraphs: Until recently, most economists assumed that displaced workers could find new work relatively easily. After all, in June 2007, on the eve of the financial crisis, unemployment was 4.6%—lower than it was before the recession of the early 1990s. Between 2000 and 2007 Americans left 5m jobs a month and started 5.1m new ones. A million or so jobs lost to trade with China over more than a decade seems tiny by comparison.
But many workers displaced by Chinese imports did not simply find another job. Mr Autor and his colleagues have shown that, at local level, employment falls at least one-for-one with jobs lost to trade, and that displaced workers are unlikely to move to seek new work. The lowest-skilled who do find new jobs tend to move to similar, and thus similarly vulnerable, employment. One reason for this immobility could be that the economy is now an unwelcoming place for jobseekers without a university degree. The housing collapse of the late 2000s, which left many Americans trapped in negative equity, may have made things worse. This new strain of research has lent support to the claim of Dani Rodrik, a globalisation sceptic, that “If you are of low skill, have little education, and are not very mobile, international trade has been bad news for you pretty much throughout your entire life.”
While that article is focused on trade, automation should have a similar impact on the kinds of jobs displaced, e.g., level of education and skill required.
(A truck loaded to the legal limit inflicts 9,000 times as much fatigue damage to the road as a car, and trucks are often overloaded.)
I propose that the government drastically increase weight fees for highway use, and use the revenue to subsidize freight trains. (The truck container can just be picked up and dropped on a flatbed rail car.)
Trucks for the last mile are still necessary.
Wait for the shit storm when they attempt to fully automate ports
This is the main story. At a time, perhaps because of fixed exchange rates curbing the flow of speculative capital, perhaps not, productivity (viz., increasing automation) gains meant median wage growth - ordinary people participated in GDP growth.
Now this is no longer true, and we get pieces lamenting the death of blue collar jobs through automation. We'll blame robots, but perhaps we should be looking at the fundamentals of our economy - how we've set the free movement of capital above all else, to our detriment.
It is a bit crap to suggest that because we are paying people more so they can pay their doctors more, for worse outcomes than anyone in the rest of the developed world, they are somehow turning out better. In any case, the fact that real wages have remained essentially flat requires us to believe that workers are fine with not having made any gains in disposable income in exchange for better benefits, which seems unlikely.
Also, the fact that labor peaked in 1973, when the graph begins to diverge, should reinforce, not contradict, this argument.
Your chart implies some sort of breakdown between productivity and income but does not demonstrate that productivity gains have been equally distributed. In fact, there are a lot of reasons to think that most productivity gains are going towards the top end of the labor pool as well. Due to the lever of technology, we see increasingly small (in terms of # of employees) firms serve increasingly large markets.
My point (well Scott Sumner's really) is that there hasn't been a breakdown between pay and productivity. People are still getting paid more if they are more productive. It's just that somewhere around 1970 or so the median worker stopped getting all that much more productive.
Now, maybe that's what you meant by your graph. In which case, fine. But most people look at that and they think that the median worker started getting cheated out of their productivity gains. And that's probably not what's happening.
1. It's a side issue, but I'd also dispute your statement that people are getting less. Life expectancy has increased ~10 years in the US since 1970.
Arguing that workers are less productive because they earn less is a tautology; it also requires us to believe that workers magically stopped being more productive in 1973 after decades of improvement.
2) Other countries have significantly larger transfers from the rich to the poor. That certainly puts more spending power in the hands of the bottom half of the bell curve (which might be a good idea!), but it doesn't mean they're more productive.
3) I don't magically believe that increases in median worker productivity slowed in the 1970s, I believe it because it matches what I see in the world. GM used to employ 100s of thousands of people when it was one of the most valuable companies in America. Now Facebook holds that status with something like 15,000.
Technology has become this huge lever where fewer and fewer people are needed to make more and more stuff. So increasingly it's the people at the top end of the bell curve that are capturing these gains. A programmer can write software that gets used by more people than ever. A retail store employee is doing pretty much the same job now that they were doing 30 years ago.
> fewer and fewer people are needed to make more and more stuff.
You're arguing against yourself, here. The latter is productivity increase, the former is productivity decrease. Also, productivity growth is not new, it has been going on as long as the economy exists. Machine automation has been occurring since the industrial revolution started, it did not start in 1973.
What started in 1973 was that the high end (basically, the owners of capital) stopped sharing productivity gains - meaning that where previously, workers were able to bargain for a share of the increase, now they cannot, because of various mechanisms of taking. CEO pay did not go up 10X because CEOs were suddenly drinking tiger blood and winning the Fields medal.
My original contention was that one of these was the shift away from the Bretton Woods system, with fixed currency exchange rates based on the dollar; going from here to speculative international currency flows and floating exchange rates is one possible mechanism for making workers less able to bargain for those productivity increases.
NO! This is EXACTLY what I (really Scott Summers) am saying has not happened. The share of national income going to labor (vs the owners of capital) has remained almost exactly constant since 1973 (and before then as well).
This is not one of those “he said, she said” where reasonable people can disagree on whether the PCE or CPI is a better price index. This is a pay/productivity gap being invented by using the slowly moving price index (NDP, which is similar to the PCE) to make worker productivity look better, and the faster moving price index (CPI) to make real wages look lower. That’s not kosher. You need to use the same type of index for both lines on the graph.
If you simply don't believe in wage stagnation, then I'm not sure what this whole conversation has been about.
http://taxfoundation.org/sites/taxfoundation.org/files/docs/...
While that graph shows labor's share as stable, many others do not, e.g. in this piece by Jared Bernstein: http://economix.blogs.nytimes.com/2013/09/09/why-labors-shar...
Of particular interest to me is that if you look at the BEA numbers, they split 'labor share' into wages and non-wage compensation (benefits, SS, medicare, etc.) - the latter share has climbed over time to 20%, meaning much of the stability in the "wage share" is just increasing money being paid to Medicare.
It's not clear what's being measured and not in that chart, but, for example, this St. Louis Fed data shows both an increasing Dividend share of GDP and a declining wage share of GDP:
http://qvmgroup.com/invest/2012/09/05/profits-cash-flow-divi...
The ripple effect is significant.
Who wants to hijack a truck and find its full of breakfast cereal?
Take the fraction of truck drivers that will become pirates
Multiply by the number of trucks that an average pirate can hijack, deliver the merchandise to a reseller of stolen goods, get paid, and launder the money before getting caught.
Divide by how many shipments a truck driver currently makes per year.
And that's an estimate of the fraction of merchandise that will be pirated.
I suspect the answer is no more than 1%, in which case it is absorbable along with other kinds of lossage.
It would seem that having trucks that can be on the road for 24 hours straight will result in less trucks being needed. I am sure the auto industry will make up for that that decrease in units sold by increasing the price per unit sold. I don't think there will be any dividend passed on to consumers.