Monday, June 26, 2017

Is Technology Replacing Mind Workers As Well As Manual Workers

Despite a stream of fake news emerging from government and corporate PR departments about the falling jobless numbers and the numbers of new jobs being created in the economies of the developed world, nobody seems to be getting that feelgood factor we associate with economic growth and prosperity. We have written many times of how the jobs allegedly being created are either in the services sector (waiters, burger flippers, bartenders, office cleaners, amateur cab drivers for Uber, parcel delivery contractors for Amazon and other online retailers and so on. So in reality when we think of not just unemployed, but under employed, the labour market is stagnant.

Think tanks, academics and economists have consistently underestimated the impact that immigration and automation would have on the jobless figures. As data on productivity gains and labor-force participation clearly show, even without taking into account the effects of massaging statistics by, for example, reclassifying those unemployed for over two years as "not economically active," and dumping them off the monthly numbers. The claim that innovation ultimately creates jobs by allowing workers to focus on higher-level problems is a fallacy. Were it to any extent true, we would already be aware of the effect of seeing more of the 2 million plus working age people who have inexplicably dropped out of the labor force making their way back in?

The likely effect of automation on not just low grade, repetitive jobs but skilled workers and the professions has been noted many times, and recently in this BBC report from March 2017. After the Thatcher government waged war on the working class throughout the 1980s and much of the 90s, the Labour government from 1997 to 2010 continued the task, their corporate friendly economic policies making it easy for global businesses to export jobs to low labour cost economies while subsidising high tech solutions in UK factories.

Automation is now coming for service-industry workers like those in the retail and food-service industries where the stronest job growth has been seen in recent years. Earlier this week, we picked up on an analysis that showed new atutomated order and pay kiosks being adopted by McDonald’s will result in the destruction of 2,500 jobs at its US restaurants by the end of 2017. We have heard of no plans to introduce this technology to Europe as yet but you can bet it will not be long in getting here.

Financial news website Bloomberg has published a “quick take” casting doubt on this “official” narrative and highlighting the carnage going on in the service sector right now. It notes how economists have repeatedly misjudged how our capacity to innovate would impact the labor market. For example, 13 years ago, two leading economists published a paper arguing that artificial intelligence would never allow a driverless car to safely execute a right turn because there are too many variables at work. Six years after that, Google and others claimed they had proved it possible to make cars fully autonomous (although the dodgy safety record of these cars in real driving conditions is being whitewashed by government, manufacturers and the media. For reasons that have little to do with sanity and much to do with the control freak nature of the political, business and academic elites, driverless cars are being forced on us, threatening the livelihood of millions of taxi and truck drivers. And now Google, Uber - though their driverless venture like everything else that company does is mired in scandal and controversy, Tesla - where safety issues are rife and the big car manufacturers are all exploring and testing this technology. Ford has said it plans to introduce a fully autonomous car by 2021.
“Throughout much of the developed world, gainful employment is seen as almost a fundamental right. But what if, in the not-too-distant future, there won’t be enough jobs to go around?" one think tank tasked with looking at social consequences of technological advances asked. Some economists think that will happen as robots and artificial intelligence become increasing capable of performing human tasks or human tasks are increasingly dumbed down so insensate machines can perform them?. Past technological upheavals created more jobs than they destroyed because they facilitated rapid economic growth. But some labor experts are concerned it will be different this time: Technology is replacing human brains as well as brawn."

When politicians talk about jobs, they tend to focus on traditional labour intensive industries, such as mining, steel production and auto making, that have always been the hardest hit by low cost imports and technological progress. Lately, though, the loss of manufacturing jobs in developed economies is barely significant (mainly because all the jobs have been automated already) compared to the losses happening and imminent in the services sector.

One of the worst his sectors is retail, consumer spending has shown little sign of recovering since the crash of 2008 while online shopping via internet sites. Retail outlets including Department Stores, supermarkets and small, specialist shops which employ far more people than many of the traditional manufacturing industries, are shedding workers at an accelerating rate. In another mainstay of the job market, agriculture, automation threatens to reduce manual worker numbers by over fifty per cent in the next few decades. Average employment in the first four months of 2017 was down in all advanced economies in the world against the same period a year earlier.

If robots are truly taking over, then why haven’t we seen the anticipated rise in productivity that one would expect from increased in efficiency?

While it's true that previously innovation has led to wealth creation, it would be foolish to believe this trend will continue unabated, infinite economic growth is not possible, at some point - and we may have are ma passed that point - people begin to feel insecure. As reported widely in the past, most of the new jobs that have been created are in low-wage, moderate-skill positions that cannot move the productivity needle much, causing the creation of new full-time jobs to stagnate.


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