From The New Yorker, TOMORROW’S ADVANCE MAN: Marc Andreessen’s plan to win the future.
In “Why Software Is Eating the World,” a widely invoked 2011 op-ed in the Wall Street Journal, Andreessen put the most optimistic spin on Silicon Valley’s tendencies. The article proclaimed that tech companies are consuming vast swaths of the economy, from books and movies to financial services to agriculture to national defense—which Andreessen saw as the healthful scavenging of a carrion way of life. On Twitter, he pursued the theme: “Posit a world in which all material needs are provided free, by robots and material synthesizers. . . . Imagine six, or 10, billion people doing nothing but arts and sciences, culture and exploring and learning. What a world that would be,” particularly as “technological progress is precisely what makes a strong, rigorous social safety net affordable.”I, for one, would love to be doing nothing but "arts and sciences, culture and exploring and learning" while living amid the continuing first-world comforts that have thus far characterized my life. The developed world, however, may be in some some very large rude awakenings.
I have reported at some length (much of it skeptical) on the gushing enthusiasm over VC funding of the Health IT space. apropos of the topic, the book I just finished.
Highly recommended. A thoughtful, disturbing read. My Amazon review.
I read a ton of books, and cite/excerpt/link them on my main blog (Blog.KHIT.org). Rarely have I encountered one as oddly enjoyable as this one. Amiably well-written, amply documented, throwing down clear logic, and plausible scenario conjectures (based on his -- always guarded -- interpretations of his broad and deep documentation).I was initially mainly interested in his healthcare chapter, but, the entire book is a major wake-up call. I will let the author speak for himself, excerpting his Introduction.
Humans seem to be sleepwalking into a future regarding which they are largely unprepared. Will we slide into a dystopian techno-neo-feudalism when the jobs largely evaporate across nearly all sectors, including the cognitive arena "knowledge worker" domains thought to be relatively bulletproof? We are all in this together -- much as our narcissistic one-tenth-of-one-percenters like to deny it. "Wealth" is a relative thing, much as they prefer to deny it.
My initial interest in this book (based on an NPR interview I heard) was that of his take on health care (my area -- Health IT), which I will be writing up forthwith. But, the larger problem is equally if not moreso compelling. How will we all "earn our keep" if reliable employment diminishes by half or more, regardless of our skills and initiative? Are we headed for "Elysium"?
...[The] “golden age” of the American economy was characterized by a seemingly perfect symbiosis between rapid technological progress and the welfare of the American workforce. As the machines used in production improved, the productivity of the workers operating those machines likewise increased, making them more valuable and allowing them to demand higher wages. Throughout the postwar period, advancing technology deposited money directly into the pockets of average workers as their wages rose in tandem with soaring productivity. Those workers, in turn, went out and spent their ever-increasing incomes, further driving demand for the products and services they were producing.A great review of Martin Ford's book at Fast Company:
As that virtuous feedback loop powered the American economy forward, the profession of economics was enjoying its own golden age. It was during the same period that towering figures like Paul Samuelson worked to transform economics into a science with a strong mathematical foundation. Economics gradually came to be almost completely dominated by sophisticated quantitative and statistical techniques, and economists began to build the complex mathematical models that still constitute the field’s intellectual basis. As the postwar economists did their work, it would have been natural for them to look at the thriving economy around them and assume that it was normal: that it was the way an economy was supposed to work— and would always work…
There are good reasons to believe that America’s economic Goldilocks period has likewise come to an end. That symbiotic relationship between increasing productivity and rising wages began to dissolve in the 1970s. As of 2013, a typical production or nonsupervisory worker earned about 13 percent less than in 1973 (after adjusting for inflation), even as productivity rose by 107 percent and the costs of big-ticket items like housing, education, and health care have soared…
On January 2, 2010, the Washington Post reported that the first decade of the twenty-first century resulted in the creation of no new jobs. Zero. This hasn’t been true of any decade since the Great Depression; indeed, there has never been a postwar decade that produced less than a 20 percent increase in the number of available jobs. Even the 1970s, a decade associated with stagflation and an energy crisis, generated a 27 percent increase in jobs. The lost decade of the 2000s is especially astonishing when you consider that the US economy needs to create roughly a million jobs per year just to keep up with growth in the size of the workforce. In other words, during those first ten years there were about 10 million missing jobs that should have been created— but never showed up.
Income inequality has since soared to levels not seen since 1929, and it has become clear that the productivity increases that went into workers’ pockets back in the 1950s are now being retained almost entirely by business owners and investors. The share of overall national income going to labor, as opposed to capital, has fallen precipitously and appears to be in continuing free fall. Our Goldilocks period has reached its end, and the American economy is moving into a new era.
It is an era that will be defined by a fundamental shift in the relationship between workers and machines. That shift will ultimately challenge one of our most basic assumptions about technology: that machines are tools that increase the productivity of workers. Instead, machines themselves are turning into workers, and the line between the capability of labor and capital is blurring as never before.
All this progress is, of course, being driven by the relentless acceleration in computer technology. While most people are by now familiar with Moore’s Law— the well-established rule of thumb that says computing power roughly doubles every eighteen to twenty-four months— not everyone has fully assimilated the implications of this extraordinary exponential progress…
It’s a good bet that nearly all of us will be surprised by the progress that occurs in the coming years and decades. Those surprises won’t be confined to the nature of the technical advances themselves: the impact that accelerating progress has on the job market and the overall economy is poised to defy much of the conventional wisdom about how technology and economics intertwine.
One widely held belief that is certain to be challenged is the assumption that automation is primarily a threat to workers who have little education and lower-skill levels. That assumption emerges from the fact that such jobs tend to be routine and repetitive. Before you get too comfortable with that idea, however, consider just how fast the frontier is moving. At one time, a “routine” occupation would probably have implied standing on an assembly line. The reality today is far different. While lower-skill occupations will no doubt continue to be affected, a great many college-educated, white-collar workers are going to discover that their jobs, too, are squarely in the sights as software automation and predictive algorithms advance rapidly in capability.
The fact is that “routine” may not be the best word to describe the jobs most likely to be threatened by technology. A more accurate term might be “predictable.” Could another person learn to do your job by studying a detailed record of everything you’ve done in the past? Or could someone become proficient by repeating the tasks you’ve already completed, in the way that a student might take practice tests to prepare for an exam? If so, then there’s a good chance that an algorithm may someday be able to learn to do much, or all, of your job. That’s made especially likely as the “big data” phenomenon continues to unfold: organizations are collecting incomprehensible amounts of information about nearly every aspect of their operations, and a great many jobs and tasks are likely to be encapsulated in that data— waiting for the day when a smart machine learning algorithm comes along and begins schooling itself by delving into the record left by its human predecessors.
The upshot of all this is that acquiring more education and skills will not necessarily offer effective protection against job automation in the future. As an example, consider radiologists, medical doctors who specialize in the interpretation of medical images. Radiologists require a tremendous amount of training, typically a minimum of thirteen years beyond high school. Yet, computers are rapidly getting better at analyzing images. It’s quite easy to imagine that someday, in the not too distant future, radiology will be a job performed almost exclusively by machines.
In general, computers are becoming very proficient at acquiring skills, especially when a large amount of training data is available. Entry-level jobs, in particular, are likely to be heavily affected, and there is evidence that this may already be occurring. Wages for new college graduates have actually been declining over the past decade, while up to 50 percent of new graduates are forced to take jobs that do not require a college degree. Indeed, as I’ll demonstrate in this book, employment for many skilled professionals— including lawyers, journalists, scientists, and pharmacists— is already being significantly eroded by advancing information technology. They are not alone: most jobs are, on some level, fundamentally routine and predictable, with relatively few people paid primarily to engage in truly creative work or “blue-sky” thinking.
As machines take on that routine, predictable work, workers will face an unprecedented challenge as they attempt to adapt. In the past, automation technology has tended to be relatively specialized and to disrupt one employment sector at a time, with workers then switching to a new emerging industry. The situation today is quite different. Information technology is a truly general-purpose technology, and its impact will occur across the board. Virtually every industry in existence is likely to become less labor-intensive as new technology is assimilated into business models— and that transition could happen quite rapidly…
All of this suggests that we are headed toward a transition that will put enormous stress on both the economy and society. Much of the conventional advice offered to workers and to students who are preparing to enter the workforce is likely to be ineffective. The unfortunate reality is that a great many people will do everything right— at least in terms of pursuing higher education and acquiring skills— and yet will still fail to find a solid foothold in the new economy.
Beyond the potentially devastating impact of long-term unemployment and underemployment on individual lives and on the fabric of society, there will also be a significant economic price. The virtuous feedback loop between productivity, rising wages, and increasing consumer spending will collapse. That positive feedback effect is already seriously diminished: we face soaring inequality not just in income but also in consumption. The top 5 percent of households are currently responsible for nearly 40 percent of spending, and that trend toward increased concentration at the top seems almost certain to continue. Jobs remain the primary mechanism by which purchasing power gets into the hands of consumers. If that mechanism continues to erode, we will face the prospect of having too few viable consumers to continue driving economic growth in our mass-market economy.
As this book will make clear, advancing information technology is pushing us toward a tipping point that is poised to ultimately make the entire economy less labor-intensive. However, that transition won’t necessarily unfold in a uniform or predictable way. Two sectors in particular— higher education and health care— have, so far, been highly resistant to the kind of disruption that is already becoming evident in the broader economy. The irony is that the failure of technology to transform these sectors could amplify its negative consequences elsewhere, as the costs of health care and education become ever more burdensome…
Ford, Martin (2015-05-05). Rise of the Robots: Technology and the Threat of a Jobless Future. Basic Books. Kindle Edition. [Locations 55 - 152]
Yes, Robots Really Are Going To Take Your Job And End The American Dream
Now that machines can diagnose cancer, trade stocks, and write symphonies, they're not just going to make humans more efficient as they have in the past—they are replacing them entirely and wrecking the economy along the way.
There's nothing new about fears of technological unemployment. The idea goes back to the Luddites in 18th-century England and John Maynard Keynes in the 1930s. Union bosses have long railed against factory automation, and governments have even resisted technology to maintain higher job levels. Yet predictions that machines would put humans out of work on a significant societal scale have never quite materialized.
However, there's reason to be believe that, unlike those previous times, we really are entering an age when people will work less. As author Martin Ford puts it in his recent book Rise of the Robots, "this time is different." New artificially intelligent machines, he says, are not so much tools to improve the efficiency of workers but really are tools to replace workers themselves...
Surveying all the fields now being affected by automation, Ford makes a compelling case that this is an historic disruption—a fundamental shift from most tasks being performed by humans to one where most tasks are done by machines. That includes obvious things like moving boxes around a warehouse, but also many "higher skill" jobs as well, such as radiology and stock trading. And don't kid yourself about your own importance: that list almost certainly includes your job.
We really could be headed for an economy with many fewer jobs in it and a severely eroded middle class, he argues. Together with other important trends like wealth inequality and globalization, new technology threatens to produce more unemployment and slow the main motor of the U.S. economy—consumer demand...
Of course, those people doing the automating may stand to do well financially—but perhaps not for long. Ultimately, Ford argues, complete automation will be bad for the economy because machines don't consume goods and services the way human beings do. The "powerful symbiosis between rising incomes and robust, broad-based consumer demand is now in the process of unwinding," he says...
The standard response to automation among economists has been to call for more education, so low-paid workers can move up the food chain. But Ford doesn't think that will help ultimately. Many people are already over-educated for what they do—just look at all the college graduates serving coffee in Starbucks.
Ford says cramming everyone into jobs requiring more skills is "analogous to believing that, in the wake of the mechanization of agriculture, the majority of displaced farm workers would be able to find jobs driving tractors." Nor, can we hope to stop the automation wave, he says. There's an inevitability to these technologies, and it's inevitable that businesses will take advantage. Whatever employers might say publicly, they don't really want to hire more people than they need...
See my post of last year, "Aye, Robot."
Will doctors and nurses (along with the broader allied health workforce) become casualties of increasingly widespread deployment of robotization and artificial intelligence? Read again my April 22nd post "Nurses and doctors in the trenches." Scroll down and re-read in particular the section on the Weeds' "Medicine in Denial."
Back to the New Yorker Andreessen article:
Last year, a programmer named Alex Payne wrote an open letter to Andreessen in which he observed, “People are scared of so much wealth and control being in so few hands. Consequently, wherever you and other gatekeepers of capital direct your attention—towards robots, 3D printers, biotech, whatever—you’re going to detect a fearful response as people scramble to determine the impact of your decisions and whims,” which only compound “lingering structural unemployment and an accumulation of capital at the top of the economic pyramid.”Easy for him to say. He won't be missing any meals.
Payne addressed his thoughts to Andreessen because Andreessen represents the Valley—both in its soaring vision and in its tendency to treat people as a fungible mass. But Andreessen waved away the criticisms as the ravings of “a self-hating software engineer.”...
Global unemployment is rising, too—this seems to be the first industrial revolution that wipes out more jobs than it creates. One 2013 paper argues that forty-seven per cent of all American jobs are destined to be automated. Andreessen argues that his firm’s entire portfolio is creating jobs, and that such companies as Udacity (which offers low-cost, online “nanodegrees” in programming) and Honor (which aims to provide better and better-paid in-home care for the elderly) bring us closer to a future in which everyone will either be doing more interesting work or be kicking back and painting sunsets. But when I brought up the raft of data suggesting that intra-country inequality is in fact increasing, even as it decreases when averaged across the globe—America’s wealth gap is the widest it’s been since the government began measuring it—Andreessen rerouted the conversation, saying that such gaps were “a skills problem,” and that as robots ate the old, boring jobs humanity should simply retool...
Chapter 6 of The Rise of the Robots ("The Health Care Challenge") is so good, I could easily end up citing all of it, which would put me at risk of Fair Use excess. Buy it and read it. You won't be disapppointed.
I'll just skip over to the next chapter.
Consider General Motors by way of comparison. Current market cap, ~$57.18 billion, 202,000 employees. A valuation of roughly $283,000 per employee.TECHNOLOGIES AND INDUSTRIES OF THE FUTURE
YouTube was founded in 2005 by three people. Less than two years later, the company was purchased by Google for about $1.65 billion. At the time of its acquisition, YouTube employed a mere sixty-five people, the majority of them highly skilled engineers. That works out to a valuation of over $25 million per employee. In April 2012, Facebook acquired photo-sharing start-up Instagram for $ 1 billion. The company employed thirteen people. That’s roughly $77 million per worker. Fast-forward another two years to February 2014 and Facebook once again stepped up to the plate, this time purchasing mobile messaging company WhatsApp for $19 billion. WhatsApp had a workforce of fifty-five— giving it a valuation of a staggering $345 million per employee.
Soaring per-employee valuations are a vivid demonstration of the way accelerating information and communications technology can leverage the efforts of a tiny workforce into enormous investment value and revenue. What’s more, they offer compelling evidence for how the relationship between technology and employment has changed. There is a widely held belief— based on historical evidence stretching back at least as far as the industrial revolution— that while technology may certainly destroy jobs, businesses, and even entire industries, it will also create entirely new occupations, and the ongoing process of “creative destruction” will result in the emergence of new industries and employment sectors— often in areas that we can’t yet imagine. A classic example is the rise of the automotive industry in the early twentieth century, and the corresponding demise of businesses engaged in manufacturing horse-drawn carriages.
As we saw in Chapter 3, however, information technology has now reached the point where it can be considered a true utility, much like electricity. It seems nearly inconceivable that successful new industries will emerge that do not take full advantage of that powerful new utility, as well as the distributed machine intelligence that accompanies it. As a result, emerging industries will rarely, if ever, be highly labor-intensive. The threat to overall employment is that as creative destruction unfolds, the “destruction” will fall primarily on labor-intensive businesses in traditional areas like retail and food preparation, while the “creation” will generate new businesses and industries that simply don’t hire many people. In other words, the economy is likely on a path toward a tipping point where job creation will begin to fall consistently short of what is required to fully employ the workforce. [op cit pp. 175-176].
The Robot will see you now -- assuming you can pay.
More Martin Ford:
Is Economic Growth Sustainable as Inequality Soars?The author concludes:
As we’ve seen, overall consumer spending in the United States has so far continued to grow even as it has become ever more concentrated, with the top 5 percent of households now responsible for nearly 40 percent of total consumption. The real question is whether that trend is likely to be sustainable in the coming years and decades, as information technology continues its relentless acceleration.
While the top 5 percent have relatively high incomes, the vast majority of these people are heavily dependent on jobs. Even within these top-tier households, income is concentrated to a staggering degree; the number of genuinely wealthy households— those that can survive and continue spending entirely on the basis of their accumulated wealth— is far smaller. During the first year of recovery from the Great Recession, 95 percent of income growth went to just the top 1 percent.
The top 5 percent is largely made up of professionals and knowledge workers with at least a college degree. As we saw in Chapter 4, however, many of these skilled occupations are squarely in the crosshairs as technology advances. Software automation may eliminate some jobs entirely. In other cases, the jobs may end up being deskilled, so that wages are driven down. Offshoring and the transition to big data– driven management approaches that often require fewer analysts and middle managers loom as other potential threats for many of these workers. In addition to directly impacting households that are already in the top tier, these same trends will also make it harder for younger workers to eventually move up into positions with comparable income and spending levels.
The bottom line is that the top 5 percent is poised to increasingly look like a microcosm of the entire job market: it is at risk of itself being hollowed out. As technology progresses, the number of American households with sufficient discretionary income and confidence in the future to engage in robust spending could well continue to contract. The risk is further increased by the fact that many of these top-tier households are probably more financially fragile than their incomes might suggest. [ibid, pp. 212-213].
In the worst-case scenario, a combination of widespread economic insecurity, drought, and rising food prices could eventually lead to social and political instability.Yeah, "drought." I've been all over that as well lately.
The greatest risk is that we could face a “perfect storm”— a situation where technological unemployment and environmental impact unfold roughly in parallel, reinforcing and perhaps even amplifying each other. If, however, we can fully leverage advancing technology as a solution— while recognizing and adapting to its implications for employment and the distribution of income— then the outcome is likely to be far more optimistic. Negotiating a path through these entangled forces and crafting a future that offers broad-based security and prosperity may prove to be the greatest challenge for our time. [ibid, pp. 283-284].
See what you think about Rise of the Robots. Listen to the NPR Fresh Air interview with the author that I put in my prior post if you've not already done so.
Among the thinkers/writers that Martin Ford has cited in Rise of the Robots that I have cited and excerpted on this blog are Peter Thiel (Zero to One) and Nicholas Carr (The Glass Cage) (scroll down). Some useful triangulations therein, as you might also tangentially find in my March 9th, 2015 post.
In his Fast Company article cited above, Ben Schiller notes that
[Martin Ford closes by making] the case for a basic income guarantee—a government payment to all citizens so they can live to a reasonable level. His version would be tied to educational accomplishment. People who get at least a high school diploma would get slightly more money, on the thinking that not having at least a diploma in the future economy will make people even less employable than they are today. He suggests $10,000 per person (which is lower than many other proposals), which would cost about $1 trillion overall, provided the payment was means-tested at the top-end.Yeah. Try selling that idea to the GOP currently in control of Congress. And, should the GOP take the White House in 2016 while keeping control of The Hill, we'll be headed oligarchically (suicidally?) in the other direction. We seem firmly in the grip of the "Persecutor" phase of the sociopolitical Rescuer-Victim-Persecutor Triangle.
This might become an economic necessity, he says, if work is no longer an option for large numbers of people. "If we look into the future and assume that machines will eventually replace human labor to a substantial degree, then I think some form of direct redistribution of purchasing power becomes essential if economic growth is to continue."
Ford used the word "plutonomy" in his book. It fits.
The words "conundrum," "dilemma," "quandary," and "paradox" come to mind. The short-term "First Mover Advantage" accruing to those implementing full-bore tech automation, so nicely set forth in Martin Ford's book, cannot but be unsustainable. An unrestrained "free market uber alles" ethos inescapably bears the DNA of its own demise. Our Calvinist heritage may now be past its sell-by date.
Pretty much sums up Martin Ford's book.
Good topical resource on the Wiki, btw: "Technological Unemployment"
Technological unemployment is unemployment primarily caused by technological change. Early concern about technological unemployment was exemplified by the Luddites, textile workers who feared that automated looms would allow more productivity with fewer workers, leading to mass unemployment. But while automation did lead to textile workers being laid off, new jobs in other industries developed. Due to this shift of labor from automated industries to non-automated industries, technological unemployment has been called the Luddite fallacy.Speaking of "work." See "WHAT MOTIVATES US AT WORK? MORE THAN MONEY"
Modern proponents of the technological unemployment concept argue that productivity has been decoupling from employment throughout the 21st century, as increasing numbers of industries are automating simultaneously. They point to studies showing that the job losses are most concentrated in occupations involving routine physical and mental labor, the jobs that are easiest to automate. The chief insight is that even though it is true that new types of jobs can always develop, the skills of most people may not be adequate to fill many of them. Various ideas on how to bypass this problem exist...
From an L.A. Times review article:
[W]hat's most interesting about "Rise of the Robots" is that it isn't actually a narrative about the imminent triumph of soulless automatons. Robots aren't the enemy. The real villain here is capitalism: a stupid form of capitalism that seems dead set on destroying itself. It would be ironic if it weren't our own future that was in peril. The relentless drive by capital to cut costs and boost profits is threatening to destroy the wellspring of economic growth that capitalism requires. Because when there are no jobs for humans, there will be no consumers with the disposable income to buy the products being produced so efficiently by robots. Henry Ford understood this when he paid his workers high enough wages to buy his cars. Today's titans of the economy appear to have forgotten the lesson..."Winner-take-all" means winner loses all in the end, fevered, sophomoric, narcissistic Libertarian fantasies notwithstanding.
ON "TECH" - I LOVE MY NEW YORKER
More to come...