Richard Baldwin on the “inhumanely fast” next phase of globalization
qz.com
qz.com
Maybe comparative advantage will save the day, but I think it is a really good idea to start accumulating capital, even at today’s valuations.
Conversely, automating the work of a plumber would require a massive investment in AI and robotics.
Also, nobody makes a robot that can be trusted to repaint the trim in my house unattended.
After looking at some of the business processes at my company I am not so sure about this anymore. There are a lot of jobs that are pretty mundane but when you look a little closer most of the processes have a lot of exceptions where the employee makes decisions that don't follow the process exactly. From what I have seen it's really hard to come up with a recipe that can be 100% automated because of all these exceptions. It seems to me that humans are a buffer that sometimes corrects unforeseen things and without that buffer the organization would do stupid things.
If you automate a process, you can in future build in variations, and gain flexibility.
And because you automated the process, your code shows how it works, and so you can quickly see what needs to be changed.
We put together a document imaging solution to gather all the relevant docs from all loads and made the pickiest customer the default for all invoices and automated the entire system. Instead of laying those people off though, we focused them on calling on unpaid invoices which greatly helped accounts receivable.
Similarly, at an oil and gas company we took the better of several business processes, molded them into one optimized process, automated it, and after a dip in the price of oil and layoffs many jobs were never rehired for.
At both of these places the leadership saw the value of getting the software right, hired for it, and we got the job done. I estimate the oil & gas company saved themselves $1 Billion over the next 10 years.
On balance I would guess you would create work overall rather than reduce it.
https://globaleinvoicing.com/en/electronic-invoice/colombia - for an english link
As in "Yes this office job could be replaced by three shell scripts but the boss wouldn't be capable of using them and they make six figures so it is cheaper to just add a minimally skilled and paid underling than to try to teach them."
It may be maddening to see the needless extra expenses and pointless job but doing so makes some economic sense. A "roll-over" to those capable of doing it themselves would likely be a slow process as inertia must be overcome. Since even if you have "also technically competent enough to automate it" there wouldn't be a selective pressure and jumping the gun on this issue may prove pound foolish if the replacements aren't up to snuff or worth the added expense from supply vs demand let alone politics.
So it doesn't automate all the jobs out of existence; it just automates most of them out of existence
Maybe. However, consider how successful Google has been at automating customer service.
Governments don't want the workers in their countries to not have a job, even when there's plenty of wealth to go around. Such people will actively demonstrate against all sorts of abuse by government employees and property owners, and even cause socialist revolutions at home and create terror abroad.
Even better for governments are when the workers in the country have heavily mortgaged houses and children with medical expenses. That's the main reason for BS jobs, high house prices, and fast food.
I recently took a job at a university. I had a bit of leverage (extensive clojure experience ftw), and I spent it on negotiating for 20 hrs/week. This gives me much more time to do "the other stuff" that's part of a career---networking, learning, interviewing, starting soon-to-be-aborted businesses. I've also been trying (with a group of friends) to figure out if there's any way we can make some sort of co-op work.
I do think "jobs are over," at least as we know them for the middle class, but I don't think that needs to mean that the middle class is over. What form it will take, though, I'm still not sure. I suspect things will keep getting weirder.
Healthcare and pensions make up 66% of the US Federal Budget. Its a similiar case in most other Western countries. If we could somehow find a way to relieve ourselves of that burden, taxes on labour could be much lower and life significantly better.
I think this is partly why we've seen such a huge boom in freelancing. Its much easier to optimise your taxes that way, instead of working for a company.
It's a good idea to invest in index funds, but investing in index funds expecting a economic apocalypse is not good reasoning.
Perhaps I am wrong, but could you provide details as to why?
The actual effect is that capital in the companies that are taking advantage of the new globoticized future does great. FANG does great. Upwork does great. AirBnB and Stripe do great, once they go public.
Labor and capital of old-line companies do terribly. This type of economic transformation doesn't just result in layoffs, it results in whole companies going out of business. Their value-networks are adopted to the cost structure of the old world; as that cost structure changes, they have no reason to exist as a firm.
When you buy an index fund, you're buying both of these types of companies. You should probably do okay, because the public market is actually pricing a lot of this phenomena in already: multiples on old-line companies are severely depressed while FANG shares are soaring, and the capitalization-weighting of the index is taking this into account. But you're leaving money on the table: many of the biggest winners will be new fast-growing startups that aren't public yet.
If the economic credibility of the nation goes, so too does the value of its cash currency.
What’s a “more white collar workers than jobs” economy look like?
Personally, I’m leaning into useful life skills, like growing food, reconnecting to hunting, low level electronics, rebuilding my car, and home myself with my money now.
I’d rather have deep experience in head and hands than a wheelbarrow full of dolla dolla bills y’all with the buying power of East German currency.
Not that I have any way to be sure the implosion is coming any time in my remaining years. But still, if we’re talking about how to prepare for such a thing, let’s get real: investments in today’s ephemeral value stores are the worst idea for securing yourself against economic collapse
If it is world wide collapse than productive skills may be the best - since even if you have guns you may be outgunned but if you can supply food any remotely smart bandit or warlord would prefer the reliable food stream of a living serf under their protection than just a storehouse's worth.
Of course these are all very long odds and preventing a collapse is likely a far better use of resources.
If we're looking at a benign-ish revolution with redistribution it won't matter much.
Personally I think the most realistic medium term risk scenario to protect against is that capitalism will hang in there, but that jobs become more scarce. An outright economic collapse or major social upheaval is likely to take more time. If you start seeing job scarcity hitting, then sure, start converting some of those index funds just in case things accelerate in the wrong direction.
Business operations as a whole are so reliant on the legal rails, like it or not, they’d have to fail spectacularly to create “economic apocalypse” to my mind.
I forget some people see run of the mill loss of wealth status as akin to loss of life. So perhaps apocalypse to them means going from $100 million in wealth to merely $10 million, but the social foundations that support that wealth largely remain intact
1 - Invest in yourself. - Health - Education - Social circle
2 - Invest in your living space. - Buy an apartment anywhere on earth where you can afford, you can take cheap flights to anywhere on earth these days. Even the remotest part of Africa can be reached within 1 day and less than 500 dollars. ( you are normally paying more than 700 dollars in rent anywhere in the developed world ).
3 - Buy high yielding government bonds, preferably multiple countries.
4 - Buy index funds.
I do not prefer gold / silver, there is severe restrictions in moving them around, and high taxation in audit and transaction. government bonds are generally tax exempt. You are better off investing in guns than gold if the economy collapses.
You know, if 5% of the workforce follows that strategy, but things go to hell for 50% because of these trends, then we will have rioting in the streets, maybe a revolution with a nasty government installed, that is what history shows usually happens. And then the new government will go after the successful people like you.
Some problems can be dealt with only through responsible collective action.
Those that remain would require some major and I mean order of magnitudes improvements in AI.
Can you give me some examples of white collar jobs that you think can be automated?
When our work was less accurate, it was because the input was bad. The input came from the finance team. The only reason they didn't disappear entirely was because they'd convinced management that there were things that the software couldn't do that only humans could futz with. The one or two percentage points their adjustments improved their results by were easily outpaced by the overall improved accuracy of the machines.
Their department did everything by copying and pasting stuff in excel in a painfully slow and cumbersome way.
She told me their challenges, so I wrote some python scripts to automate their work.
When she showed it to her boss, hoping to get a positive response, his reaction was "Put that away if you like your job here!"
This is the nightmare of every middle manager. They won't be able to justify their existence if their teams get automated away so they will actively fight against it.
How big is their finance department now?
This is an interesting take. The alternative to individually trying to each become capitalists, is grouping together and making sure we all have access to the proceeds of automation.
If we somehow exhaust the mineral deposits on Earth in the next few hundred years, we can and will mine the solar system.
In the absolute worst case scenario, the rest of the natural world off of Earth is available for ruthless exploitation by our Capitalist ways for thousands and thousands of years to come. The clear bet is that it will be exploited eventually, probably by whatever we replace ourselves with.
The other way just doesn't scale.
> A: There’s a mismatch of job displacement and job creation. Job displacement is being driven at the speed of digital technology, which is explosive at this moment. And displacement is the business model for the AI geniuses and all those companies. All of them are hoping to get rich by displacing workers, not by creating jobs. Creating jobs is much slower. So, at least in the next few years, the displacement will outstrip the creation. But it’s not the direction of travel which is wrong. It’s just a mismatch of speed.
Citation needed. There's zero evidence that "creating jobs is slower." People have been saying this every year for well over a century, and yet unemployment is quite low right now in the US.
It's one of those things that seems logical -- but all evidence is to the contrary. And it's probably because it's a lot easier for the human brain to spot a huge loss of jobs in one industry, than a small increase across many industries that adds up to the same size.
Also, the jobs can already exist but just not be filled. We don't necessarily need to wait for them to be "created".
I don't see the point in making an argument when it's only based on "there is a(ny) job". Here where I live now the bureaucrats can trim the number of jobless by putting them into temporary and mostly useless training programs. Useless according not to me but to any analysis ever published in (the major) news media in my country. Also, the number of people working for worker-lease companies instead of being "direct employees" has increased may times over the last two decades. Part of making the workforce "more flexible". Now they have less pay, are sent around the country much more often and can't establish themselves in one place (or have a family life where they are away all week and have stressful weekend travel to and from the places of work) - but sure, "flexibility" is up. It does not matter if the families those people create will have much less happy kids - as long as the total numbers still look alright. Right?If you "migrate" a job from a stable decades-long factory job to being an Uber driver, 1 == 1 so it's all the same on the bottom line?
Back-breaking work on the farm. Mind-numbing and body-destroying assembly line work that could cut off your hand. Construction work without any of the safety standards we now have. Alcohol consumption and tobacco smoking was sky-high.
Any way you slice it, the quality of jobs today is tremendously higher than in the past, and people are not being paid less.
True, job tenure is no longer as long-term as it used to be, and probably doesn't come with a pension, but the flip side is that it's also never been easier to find a job and leave a bad one, and you can manage your own 401(k) that won't disappear if your employer goes bankrupt.
Really? What about 40 years ago? Jobs were a lot easier, and you could buy a house and raise a family on one income. Why do you ignore that period of time, when workers had it good?
So the argument falls apart the same way as the "People in Africa are starving so be lucky you have food" argument to your 4 year old does. You might be right, but it's an argument that doesn't actually address the lived reality of the person.
I don't know how things are exactly in the US but my country is wealthier than ever. Hundreds of thousands of people are retiring so there are tons of jobs going to be around.
What I noticed in bigcorps is that they do the same stuff that small startups do with way more people. What a startup does with 3 people, bigcorp needs 60 people for that. But when you look at it from up close, it's incredibly hard to tell which of those 60 people are the ones that are actually needed.
And this is without even getting into the political differences of the times. In the 1950s people were still just getting over a world war that killed 3% of the entire world's population (imagine 231 million people dying today, to give that seemingly small number the scale it deserves) and brought entire cities to rubble. And this against an extremely capable enemy with genocidal aims, who nearly won. And without missing a beat we then entered into the cold war where everybody woke up realizing that there was a very real chance that their life could end on this day due to imminent nuclear war. Not some abstract 'doomsday clock' nonsense, but literally both sides actively positioning and aiming their nukes at one another ready to go off at a moment's notice - something that genuinely nearly happened multiple times, children practicing drills against nuclear disaster, and regular families building nuclear survival bunkers.
Today we live in a bit of a paradox. Relative to most any time in the past, we live better than ever. Yet people are less satisfied than ever. And I think there's a simple reason. Imagine Star Trek. What would really happen if we had e.g. holodecks? You can do anything, anybody, become anything, anybody, etc. And you would never need, or want, for anything. You would have no conflict, no animosity, and no hope for change since you already have everything. Want to know what the Great Filter of the Fermi Paradox is? Comfort. This would destroy absolutely all meaning in life for most people. People need to want. It provides a clean explanation to so many things. This issue we're discussing, upper class young adults on twitter tirelessly spending their days trying to find things to be offended about - or failing that taking offense on behalf of people they know nothing about, billionaires who continue to work 12 hour days to expand their wealth to no real point, and so on.
[1] - https://alfred.stlouisfed.org/series?seid=AVHWPEUSA065NRUG
[2] - https://www.ehstoday.com/safety/management/good_times_toll
By those sorts of measures we aren't doing great over the last 30 years.
UK's Ford Dagenham - mainly an engine plant - once used to employ 40 or 50,000 people in the fifties. Now it employs about 2,000, yet produces more engines. The same picture will be repeated for all of their sites.
Cowley where the new BMW Mini is produced now employs about 3,500, it employed around 25,000 when it was one of two plants producing the original Mini in the sixties and seventies. The current car sells more per year.
https://www.bls.gov/opub/ted/1999/sept/wk5/art02.htm?view_fu...
But, in your second reference, see the "back data" graph links for 1990-2019, in any of the manufacturing categories.
I would expect that figures for the sixties and seventies would be much higher still, as much of the automation and de-industrialisation was through the eighties. The seventies perhaps, as a pure guess, the maxima, and a crash from the oil crisis. It's a shame the data goes back no further. I suspect the eighties, where their graph in the first link starts may have set the minima after decline, with slow growth since.
[1] https://pdfs.semanticscholar.org/24ba/b100ea6eb7d96c9c4247eb...
I think it leaves the picture unclear without the associated parts trade, which aren't normally picked out when I've seen news pieces on the auto trade here in Europe. So we get stories and graphs of producing more cars than ever despite the industry employing few. Also leaves me wondering what those staff are doing when car factories themselves have lost such a huge proportion of their workforce.
I don't find any compelling arguments to disprove what a lot of seeming educated and intelligent researchers and social critics are saying regarding the coming disruption of the labor market.
Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Let us turn to Adam Smith’s Wealth of Nations. The first chapter [...] is called “Of the division of labor,” and on the second page of this first chapter the author tells us that a workman unacquainted with the use of machinery employed in pin-making “could scarce make one pin a day, and certainly not twenty,” but with the use of this machinery he can make 4,800 pins a day. In the pin-making industry there was already, if machines merely throw men out of jobs, 99.98 percent unemployment. Arkwright invented his cotton-spinning machinery in 1760. At the time it was estimated that there were in England 5,200 spinners using spinning wheels, and 2,700 weavers - in all 7,900 persons engaged in the production of cotton textiles. The introduction of Arkwright’s invention was opposed on the ground that it threatened the livelihood of the workers, and the opposition had to be put down by force. Yet in 1787 [...] the number of persons actually involved in the spinning and weaving of cotton had risen from 7,900 to 320,000, an increase of 4,400 percent. [...] Technophobes will assert: “That may have been all very well in the past, but today conditions are fundamentally different; and now we simply cannot afford to develop any more labor-saving machines.” If it were indeed true that the introduction of labor-saving machinery is a cause of constantly mounting unemployment and misery, the logical conclusion to be drawn would be revolutionary, not only in the technical field but for our whole concept of civilization. Not only should we have to regard all further technical progress as a calamity; we should have to regard all past technical progress with equal horror. There is also an absolute sense in which machines may be said to have enormously increased the number of jobs. The population of the world today is four times as great as in the middle of the 18th century, before the Industrial Revolution had got well under way. Machines may be said to have given birth to this increased population; for without the machines, the world would not have been able to support it. Three out of every four of us, therefore, may be said to owe not only our jobs but our very lives to the machines.
[From “Economics in One Lesson”]
Hazlitt likely didn't even dream of people being replaced by algorithms.
The trick in the past has always been to invent new types of jobs to take advantage of the technological progress. We're out of tricks if one can automate highly sophisticated tasks.
The book quote provides a way for you to understand for how long this claim is made (with an exemple from the 18th century), and yet here we are.
_because_ of automation lowering car prices among other causes.
The average car price from 1967 is $3000 cheaper in 2016 dollars than the 2016 average car price. That may be due to a number of factors but I'm at least providing some data to back up my assertions.
Contrast this with the claim that automation leads to massive unemployment.
Opportunity for innovation in the market is far less than opportunity for innovation (ie automation) in business processes.
Given a hypothetical business equilibrium (business growth has stabilized or slowed to a small linear function) I have 2 employees. 1 employee writes a program to automate the other employee's job. Now I have 1 employees.
In order for me to have another employee, I have to have a new product and/or process or a whole new business.
I have personally automated people out of a job. Like, they got fired and never replaced. Maybe 5 in my career.
People want better coffee and pastries, suddenly there are hundreds of thousands of jobs for baristas, bakers and managers.
People grow older and need care, suddenly the number of employees in home care expands drastically.
And so on. Maybe for you to need another employee you need a new product/process/business... but most business are just trying to meet existing demand in simple small ways.
> Maybe for you to need another employee you need a new product/process/business..
The "I" in the example, was for simplicity, try not to take it too far. The candy vendor family at the fair goes to lots of fairgrounds. They are living on the demand that exists, or he would have more employees than his family. The idea that there is some phantom demand, not being met, is at odds with reality of existing businesses as they exist (if there was more demand, there would be growth). New markets necessarily come at the expense of old markets, by-in-large because the disposable income available does not serve new demand, but is the lever that allows for it. Unless adjusted wages spike, the measurable loss of jobs will outpace the growth in every timescaled window where the related events occur.
More generally, claims that just as many jobs are being created need evidence. I can easily provide evidence of jobs being eliminated, in the absence of evidence for job creation the conclusion is obvious.
Obviously not. You're completely ignoring that entirely new job categories are being created every year, and that the attractiveness of a job depends on many things which can constantly change, including salary, working conditions, geography, hours, etc.
The US employment rate is the highest it's been in 50 years.
I don't think there's some benevolent cosmic law that ensures job creation will always match job destruction, so I can't assume these dire predictions will never come true. But after so many years crying wolf it's hard to take them seriously until macroeconomic indicators show they're happening.
When people haven't been able to adapt, results are every bit as tragic as people predicted. Think of the large swaths of Appalachia or the Midwest that are still smarting from our transition away from a coal & steel economy.
The grand total is being pumped by China, India, Eastern Europe playing catch up, with places like South Korea having almost reached it.
"Globotics". "Telemigration". Please. Companies have been outsourcing call centers to India for decades now. That trend seems to have peaked; outside of telemarketing, the lower cost isn't worth the lower performance.
In GPUs, a billion transistors in 2009, twenty-one billion in 2017.
In FGPAs, a billion in 2004 and fifty billion in 2018.
First-world workers aren't losing jobs in aggregate at all. They're not statistically worse off at all. (Unfortunately median income hasn't been improving, but it certainly hasn't been getting meaningfully worse.)
While the global poor are experiencing massive benefits lifting them out of poverty.
I fail to see what is inhumane here.
I keep thinking about the age-old discussion about why the tech industry doesn't just move away from Silicon Valley to a location with a low cost of living. And the answer usually involves the existence of a critical mass of highly effective potential employees, of a cluster economy. There really are some jobs whose pay rates do not matter. But not all that many. All the rest will sooner or later be vulnerable to global outsourcing/telemigration.
This will end well.
In particular AI sucks, but virtually integrated expert systems don't. Too bad they have a hard time emerging under capitalism. Because your supply chain is always insanely stupid mega rent seekers.
Maybe some aquiponics megaco-op can ensure its automation engineers don't starve, which will be to socialism what the loom was to industrial capitalism. Get on it Mondragon.
Oh, automatic trucks, yeah, probably not. That's going to be really hard to pull off because the first time one of those trucks crushes and kills a toddler, the liability is going to rise tremendously. Same with drones--the first one that crashes into a house and causes a fire that kills a whole family is going to force them to reconsider their idiotic plans. It doesn't matter how you design the things because the tech isn't what is important.
As far as replacing the software engineering work I do with "freelancers" is a sure way to put my whole company out of business. If there were any freelancers out there who could assist us we would have already hired them. We don't want "freelancers" we want people who will be around to build up institutional knowledge and perform because they know our company and our data. As it is, our office in India is about 30% as efficient as the one on the US, and that whole experiment has already been running for almost two decades. It's not just the timezones, it's just the whole nature of the job. We have people with 15-20 years of experience working with us. It's just too naive a picture to say "globotics" which is just a made up word--even says so in the article. If you want good outcomes in a corporation, it would be wise to hire good people and not just stock up on human cattle.
Human driven trucks kill people now and have done so for decades. IMHO, the liability comparison that will matter, the one that regulators, insurance companies, the courts and the market will eventually embrace will instead be: are automatic trucks as safe or just a little bit safer than human driven trucks?
One drone burning a house - just won't have the effect you suggest, or the world would look very different right now.
You can see this at the IT department in my company. They are totally outsourced and offshored and it shows that they are not capable of doing anything moderately complex because every time they start something that start from 0. They have almost no people with any institutional memory so before they start something they have to spend an insane amount of time learning the current environment. If they had people who have experience from past projects they could do things in a fraction of time. But I guess the short term benefit of firing expensive experienced workers is easier to justify than the long term benefit of keeping them.