Tag Archives: Automation

Why UNIVERSAL BASIC INCOME is Our Future. The War on Normal People – Andrew Yang.

The Truth About America’s Dissappearing Jobs.

This is the most pressing economic and social issue of our time; our economy is evolving in ways that will make it more and more difficult for people with lower levels of education to find jobs and support themselves.

Soon, these difficulties will afflict the white-collar world. it’s a boiling pot getting hotter one degree at a time. And we’re the frog.

In order for society to continue to function and thrive when tens of millions of people don’t have jobs, we will need to rethink the relationship between work and being able to pay for basic needs.

And then, we will have to determine ways to convey the psychic and social benefits of work in other ways.

Little effort is being made to distribute the gains from automation and reverse the decline in opportunities. To do so would require an active, stable, invigorated, unified federal government willing to make large bets. This, unfortunately, is not what we have.

We need a revitalized, dynamic government to rise to the challenge posed by the largest economic transformation in the history of mankind.

“We are at the most dangerous moment in the development of humanity. .. the rise of artificial intelligence is likely to extend job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.” Stephen Hawking

“Human beings are also animals, to manage one million animals gives me a headache.” Terry Gou, founder of Foxconn

THE GREAT DISPLACEMENT

I am writing from inside the tech bubble to let you know that we are coming for your jobs.

I recently met a pair of old friends for drinks in Manhattan. One is an executive who works at a software company in New York. They replace call center workers with artificial intelligence software. I asked her whether she believed her work would result in job losses. She responded matter-of-factly, “We are getting better and better at things that will make large numbers of workers extraneous. And we will succeed. There needs to be a dramatic reskilling of the workforce, but that’s not going to be practical for a lot of people. It’s impossible to avoid a lost generation of workers.” Her confidence in this assessment was total. The conversation then quickly shifted to more pleasant topics.

I later met with a friend who’s a Boston based venture capitalist. He told me he felt “a little uneasy” about investing in software and robotics companies that, if successful, would eliminate large numbers of jobs. “But they’re good opportunities,” he noted, estimating that 70 percent of the startups he’s seeing will contribute to job losses in other parts of the economy.

In San Francisco, I had breakfast with an operations manager for a large tech company. He told me, “I just helped set up a factory that had 70 percent fewer workers than one even a few years ago would have had, and most of them are high-end technicians on laptops. I have no idea what normal people are going to do in a few years.”

Normal people. Seventy percent of Americans consider themselves part of the middle class. Chances are, you do, too. Right now some of the smartest people in the country are trying to figure out how to replace you with an overseas worker, a cheaper version of you, or, increasingly, a widget, software program, or robot. There’s no malice in it. The market rewards business leaders for making things more efficient. Efficiency doesn’t love normal people. It loves getting things done in the most cost-effective way possible.

A wave of automation and job loss is no longer a dystopian vision of the future, it’s well under way. The numbers have been telling a story for a while now that we have been ignoring. More and more people of prime working age have been dropping out of the workforce. There’s a growing mass of the permanently displaced. Automation is accelerating to a point where it will soon threaten our social fabric and way of life.

Experts and researchers project an unprecedented wave of job destruction coming with the development of artificial intelligence, robotics, software, and automation. The Obama White House published a report in December 2016 that predicted 83 percent of jobs where people make less than $20 per hour will be subject to automation or replacement. Between 2.2 and 3.1 million car, bus, and truck driving jobs in the United States will be eliminated by the advent of self-driving vehicles.

Read that last sentence again: we are confident that between 2 and 3 million Americans who drive vehicles for a living will lose their jobs in the next 10 to 15 years. Driving a truck is the most common occupation in 29 states. Self-driving vehicles are one of the most obvious job-destroying technologies, but there are similar innovations ahead that will displace cashiers, fast food workers, customer service representatives, administrative assistants, and even well-paid whitecollar jobs like wealth managers, lawyers, and insurance agents, all within the span of a few short years. Suddenly out of work, millions will struggle to find a new job, particularly those at the lower end of the skill ladder.

Automation has already eliminated about 4 million manufacturing jobs in the United States since 2000. Instead of finding new jobs, a lot of those people left the workforce and didn’t come back. The U.S. labor force participation rate is now at only 62.9 percent, a rate below that of nearly all other industrialized economies and about the same as that of El Salvador and the Ukraine. Some of this is driven by an aging population, which presents its own set of problems, but much of it is driven by automation and a lower demand for labor.

Each 1 percent decline in the labor participation rate equates to approximately 2.5 million Americans dropping out. The number of working-age Americans who aren’t in the workforce has surged to a record 95 million. Ten years into the nation’s recovery from the financial crisis and 95 million working-age Americans not in the workforce, I’ve taken to calling this phenomenon the Great Displacement.

The lack of mobility and growth has created a breeding ground for political hostility and social ills. High rates of unemployment and underemployment are linked to an array of social problems, including substance abuse, domestic violence, child abuse, and depression. Today 40 percent of American children are born outside of married households, due in large part to the crumbling marriage rate among working-class adults, and overdoses and suicides have overtaken auto accidents as leading causes of death. More than half of American households already rely on the government for direct income in some form. In some parts of the United States, 20 percent of working-age adults are now on disability, with increasing numbers citing mood disorders. What Americans who cannot find jobs find instead is despair. If you care about communities and our way of life, you care about people having jobs.

This is the most pressing economic and social issue of our time; our economy is evolving in ways that will make it more and more difficult for people with lower levels of education to find jobs and support themselves. Soon, these difficulties will afflict the white-collar world. it’s a boiling pot getting hotter one degree at a time. And we’re the frog.

In my role as founder of Venture for America, I spent the past six years working with hundreds of startups across the country in cities like Detroit, New Orleans, Cincinnati, Providence, Cleveland, Baltimore, Philadelphia, St. Louis, Birmingham, Columbus, Pittsburgh, San Antonio, Charlotte, Miami, Nashville, Atlanta, and Denver. Some of these places were bustling industrial centers in the late 19th and 20th centuries, only to find themselves faced with population loss and economic transition as the 20th century wound down. Venture for America trains young aspiring entrepreneurs to work at startups in cities like these to generate job growth. We’ve had many successes. But the kinds of jobs created tend to be very specific; every business I worked with will hire the very best people it can find, particularly startups. When entrepreneurs start companies and expand, they generally aren’t hiring a down-on-his-or-her-luck worker in need of a break. They are hiring the strongest contributors with the right mix of qualities to help an early-stage company succeed. Most jobs in a startup essentially require a college degree. That excludes 68 percent of the population right there. And some of these companies are lifting further inefficiencies out of the system, reducing jobs in other places even while hiring their own new workers.

There’s a scene in Ben Horowitz’s book The Hard Things about Hard Things in which he depicts the CEO of a company meeting with his two lieutenants. The CEO says to one of them, “You’re going to do everything in your power to make this deal work.” Then he turns to the other and says, “Even if he does everything right, it’s probably not going to work. Your job is to fix it.” That’s where we’re at with the American economy. Unprecedented advances are accelerating in real time and wreaking havoc on lives and communities around the country, particularly on those least able to adapt and adjust.

We must do all we can to reduce the worst effects of the Great Displacement, it should be the driving priority of corporations, government, and nonprofits for the foreseeable future. We should invest in education, job training and placement, apprenticeships, relocation, entrepreneurship, and tax incentives, anything to help make hiring and retaining workers appealing. And then we should acknowledge that, for millions of people, it’s not going to work.

In the United States we want to believe that the market will resolve most situations. In this case, the market will not solve the problem, quite the opposite. The market is driven to reduce costs. It will look to find the cheapest way to perform tasks. The market doesn’t want to provide for unemployed truck drivers or cashiers. Uber is going to get rid of its drivers as soon as it can. Its job isn’t to hire lots of people, its job is to move customers around as efficiently as possible. The market will continue to throw millions of people out of the labor force as automation and technology improve. In order for society to continue to function and thrive when tens of millions of Americans don’t have jobs, we will need to rethink the relationship between work and being able to pay for basic needs. And then, we will have to determine ways to convey the psychic and social benefits of work in other ways.

There is really only one entity, the federal government, that can realistically reformat society in ways that will prevent large swaths of the country from becoming jobless zones of derelict buildings and broken people. Nonprofits will be at the front lines of fighting the decline, but most of their activities will be like bandages on top of an infected wound. State governments are generally hamstrung with balanced budget requirements and limited resources.

Even if they don’t talk about it in public, many technologists themselves fear a backlash. My friends in Silicon Valley want to be positive, but many are buying bunkers and escape hatches just in case. One reason that solutions are daunting to even my most optimistic friends is that, while their part of the American economy is flourishing, little effort is being made to distribute the gains from automation and reverse the decline in opportunities. To do so would require an active, stable, invigorated, unified federal government willing to make large bets. This, unfortunately, is not what we have. We have an indebted state rife with infighting, dysfunction, and outdated ideas and bureaucracies from bygone eras, along with a populace that cannot agree on basic facts like vote totals or climate change. Our politicians offer half-hearted solutions that will at best nibble at the edges of the problem. The budget for research and development in the Department of Labor is only $4 million. We have a 1960s-era government that has few solutions to the problems of 2018.

This must change if our way of life is to continue. We need a revitalized, dynamic government to rise to the challenge posed by the largest economic transformation in the history of mankind.

The above may sound like science fiction to you. But you’re reading this with a supercomputer in your pocket (or reading it on the supercomputer itself) and Donald Trump was elected president. Doctors can fix your eyes with lasers, but your local mall just closed. We are living in unprecedented times. The future without jobs will come to resemble either the cultivated benevolence of Star Trek or the desperate scramble for resources of Mad Max. Unless there is a dramatic course correction, I fear we are heading toward the latter.

As Bismarck said, “If revolution there is to be, let us rather undertake it not undergo it.” Society will change either before or after the revolution. I choose before.

I’m a serial entrepreneur who started out as a lawyer. Before launching Venture for America, I co-founded an Internet company, worked at a health care software startup, and ran a national education company that was acquired in 2009. I’ve worked in startups and economic development for 17 years. I know how companies operate and how jobs are created and reduced. I’m also both an ardent capitalist and completely certain that our system needs to change in order to continue our way of life.

Our society has already been shaped by large-scale changes in the economy due to technological advances. it turns out that Americans have been dealing with the lack of meaningful opportunities by getting married less and becoming less and less functional. The fundamental message is that we are already on the edge of dystopia with hundreds of thousands of families and communities being pushed into oblivion.

Education and retraining won’t address the gaps; the goalposts are now moving and many affected workers are well past their prime. We need to establish an updated form of capitalism, I call it Human Centered Capitalism, or Human Capitalism for short, to amend our current version of institutional capitalism that will lead us toward ever increasing automation accompanied by social ruin. We must make the market serve humanity rather than have humanity continue to serve the market. We must simultaneously become more dynamic and more empathetic as a society. We must change and grow faster than most think possible.

When the next downturn hits, hundreds of thousands of people will wake up to do their jobs only to be told that they’re no longer needed. Their factory or retail store or office or mall or business or truck stop or agency will close. They will look for another job and, this time, they will not find one. They will try to keep up a brave face, but the days and weeks will pass and they will become more and more defeated. They will almost always blame themselves for their lot. They will say things like, “I wish I’d applied myself more in school,” or “I should have picked another job.” They’ll burn through their meager savings. Their family lives and communities will suffer. Some will turn to substance abuse or watch too much TV. Their health will slip, the ailments they’ve been working through will seem twice as painful. Their marriages will fail. They will lose their sense of self-worth. Their physical environments will decay around them and their loved ones will become reminders of their failure.

For every displaced worker, there will be two or three others who have their shifts and hours reduced, their benefits cut, and their already precarious financial lives pushed to the brink. They will try to consider themselves lucky even as their hopes for the future dim.

Meanwhile, in Manhattan and Silicon Valley and Washington, DC, my friends and I will be busier than ever fighting to stay current and climb within our own hypercompetitive environments. We will read articles with concern about the future and think about how to redirect our children to more fertile professions and livelihoods. We will retweet something and contribute here and there. We will occasionally reflect on the fates of others and shake our heads, determined to be among the winners in whatever the new economy brings.

The logic of the meritocracy is leading us to ruin, because we are collectively primed to ignore the voices of the millions getting pushed into economic distress by the grinding wheels of automation and innovation. We figure they’re complaining or suffering because they’re losers.

We need to break free of this logic of the marketplace before it’s too late.

We must reshape and accelerate society to bring us all to higher ground. We must find new ways to organize ourselves independent of the values that the marketplace assigns to each and every one of us.

We are more than the numbers on our paychecks and we are going to have to prove it very quickly.

PART ONE

WHAT’S HAPPENING TO JOBS

1. MY JOURNEY

I grew up a skinny Asian kid in upstate New York who was often ignored or picked on, like one of the kids from Stranger Things but nerdier and with fewer friends. It stuck with me. I’ve never forgotten what it felt like to be young. To be gnawed at by doubts and fears so deep that they inflict physical pain, a sense of nausea deep in your stomach. To feel like an alien, to be ignored or ridiculed. I didn’t think it was possible to forget all that. But it turns out that most of us do. In movies, they show children going through formative experiences at home. The protagonists go back where they came from later to make it better. In real life, none of us goes back.

My parents valued education deeply. My father, who immigrated from Taiwan, worked in the research labs of GE and IBM. He got his PhD in physics from Berkeley and generated 69 patents over his career. He met my mom, also from Taiwan, while in grad school. She has a master’s in statistics and worked as a computer services administrator at our local university before becoming an artist. My brother became a professor, which is kind of the family business. Being the first generation born in this country gave me both a fierce love for the United States and a deep sense of what it means to struggle to fit in.

I was one of the only Asians in my local public school. That didn’t go unnoticed. Classmates offered frequent reminders as to my identity:

“What’s up, Chink.” “Hey… you… wanna fight?” said with mouth moving but no sound coming out, to imitate a kung fu movie with bad dubbing.

“Ching chong ching chong.”

“Hey, you know what Chinese use for blindfolds?

Dental floss!”

“You see that?” Demonstrates a blank face. “That’s the way the gook laughs.”

“Hey, Yang, you hungry? You want a gook-ie?”

“Hey, Yang. I see where you’re looking. No interracial dating.”

“Hey, Yang, what’s it like having such a small dick? Everyone knows Chinese guys have small dicks. Do you need tweezers to masturbate?”

Most of this was in middle school. I had a few natural responses: I became quite self-conscious. I started wondering if I did indeed have a small dick. Last, I became very, very angry.

Perhaps as a result, I’ve always taken pride in relating to the underdog or little guy or gal. As I grew up, I tried to stick up for whoever seemed excluded or marginalized. I became a Mets fan. I’d go to a party and find the person who seemed the most alone or uncomfortable and strike up a conversation. I worked out a little too much in college.

I grew up and found that my zeal extended into my professional life. I love small companies and helping them grow. After five months as a corporate lawyer, I co-founded an Internet company when I was 25, back in 2000. After it went bust, I worked at a medical records software company, and then helped a friend, Zeke Vanderhoek, with his GMAT prep company when he was starting out as a solo tutor in a Starbucks. He eventually asked me to take over as CEO. Between the two of us and our team, we grew the company to become number one in the country.

By 2010 I was riding high. Our company, Manhattan Prep, had been acquired by the Washington Post Company’s Kapian division for millions of dollars. I was 35 years old, the head of a national education company that I loved, living in New York City among family and friends, and engaged to marry my fiancée the following year. I was on top of the world.

And yet, something bothered me that I couldn’t let go. I’d trained hundreds of young people, as CEO of Manhattan Prep I’d taught the analyst classes at Goldman Sachs, McKinsey, JP. Morgan, Morgan Stanley, and many other companies. These college graduates often seemed disenchanted with their careers; they were looking to go to business school to take a break and find the next step. Many of them hailed from other parts of the country, Michigan, Ohio, Georgia, and had come to Wall Street for better opportunities. When I talked to them after class, they seemed to be searching for some higher purpose that had eluded them. They reminded me of myself a decade earlier, when I had started my career as an unhappy corporate lawyer.

. . .

from

The War on Normal People. The Truth About America’s Dissappearing Jobs and Why Universal Basic Income is Our Future

by Andrew Yang

get it at Amazon.com

Automation is more complex than people think. Here’s why – Viktor Weber.

Viktor Weber, Founder & Director, Future Real Estate Institute.

Automation is a topic on which most people have an opinion. The level of knowledge on the subject varies greatly, as does the amount of fear that people feel towards the technological revolution that is taking place.

I get the impression that even informed writers — including myself — in this field often take, for numerous reasons, convenient short-cuts when it comes to writing and talking about automation.

It is therefore time to address the abundance of factors that are influencing and will continue to influence how humanity moves forward with automation. It is an intertwined and complex network of factors that allow for multiple outcomes. This article will shine the light on a selection of these parameters.

Medium.com

No, wealth isn’t created at the top. It is merely devoured there – Rutger Bregman. 

This piece is about one of the biggest taboos of our times. About a truth that is seldom acknowledged, and yet, on reflection, cannot be denied. The truth that we are living in an inverse welfare state.

These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurialism that are helping to advance the whole world.

Now, we may disagree about the extent to which success deserves to be rewarded – the philosophy of the left is that the strongest shoulders should bear the heaviest burden, while the right fears high taxes will blunt enterprise – but across the spectrum virtually all agree that wealth is created primarily at the top.

So entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.

In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.

To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.

But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.

For those who know their history, the term “rentier” conjures associations with heirs to estates, such as the 19th century’s large class of useless rentiers, well-described by the French economist Thomas Piketty. These days, that class is making a comeback. (Ironically, however, conservative politicians adamantly defend the rentier’s right to lounge around, deeming inheritance tax to be the height of unfairness.) But there are also other ways of rent-seeking. From Wall Street to Silicon Valley, from big pharma to the lobby machines in Washington and Westminster, zoom in and you’ll see rentiers everywhere.

There is no longer a sharp dividing line between working and rentiering. In fact, the modern-day rentier often works damn hard. Countless people in the financial sector, for example, apply great ingenuity and effort to amass “rent” on their wealth. Even the big innovations of our age – businesses like Facebook and Uber – are interested mainly in expanding the rentier economy. The problem with most rich people therefore is not that they are coach potatoes. Many a CEO toils 80 hours a week to multiply his allowance. It’s hardly surprising, then, that they feel wholly entitled to their wealth.

It may take quite a mental leap to see our economy as a system that shows solidarity with the rich rather than the poor. So I’ll start with the clearest illustration of modern freeloaders at the top: bankers. Studies conducted by the International Monetary Fund and the Bank of International Settlements – not exactly leftist thinktanks – have revealed that much of the financial sector has become downright parasitic. How instead of creating wealth, they gobble it up whole.

Don’t get me wrong. Banks can help to gauge risks and get money where it is needed, both of which are vital to a well-functioning economy. But consider this: economists tell us that the optimum level of total private-sector debt is 100% of GDP. Based on this equation, if the financial sector only grows, it won’t equal more wealth, but less. So here’s the bad news. In the United Kingdom, private-sector debt is now at 157.5%. In the United States the figure is 188.8%.

In other words, a big part of the modern banking sector is essentially a giant tapeworm gorging on a sick body. It’s not creating anything new, merely sucking others dry. Bankers have found a hundred and one ways to accomplish this. The basic mechanism, however, is always the same: offer loans like it’s going out of style, which in turn inflates the price of things like houses and shares, then earn a tidy percentage off those overblown prices (in the form of interest, commissions, brokerage fees, or what have you), and if the shit hits the fan, let Uncle Sam mop it up.

The financial innovation concocted by all the math whizzes working in modern banking (instead of at universities or companies that contribute to real prosperity) basically boils down to maximising the total amount of debt. And debt, of course, is a means of earning rent. So for those who believe that pay ought to be proportionate to the value of work, the conclusion we have to draw is that many bankers should be earning a negative salary; a fine, if you will, for destroying more wealth than they create.

Bankers are the most obvious class of closet freeloaders, but they are certainly not alone. Many a lawyer and an accountant wields a similar revenue model. Take tax evasion. Untold hardworking, academically degreed professionals make a good living at the expense of the populations of other countries. Or take the tide of privatisations over the past three decades, which have been all but a carte blanche for rentiers. One of the richest people in the world, Carlos Slim, earned his millions by obtaining a monopoly of the Mexican telecom market and then hiking prices sky high. The same goes for the Russian oligarchs who rose after the Berlin Wall fell, who bought up valuable state-owned assets for song to live off the rent.

But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking.

Take the pharmaceutical industry. Companies like GlaxoSmithKline and Pfizer regularly unveil new drugs, yet most real medical breakthroughs are made quietly at government-subsidised labs. Private companies mostly manufacture medications that resemble what we’ve already got. They get it patented and, with a hefty dose of marketing, a legion of lawyers, and a strong lobby, can live off the profits for years. In other words, the vast revenues of the pharmaceutical industry are the result of a tiny pinch of innovation and fistfuls of rent.

Even paragons of modern progress like Apple, Amazon, Google, Facebook, Uber and Airbnb are woven from the fabric of rentierism. Firstly, because they owe their existence to government discoveries and inventions (every sliver of fundamental technology in the iPhone, from the internet to batteries and from touchscreens to voice recognition, was invented by researchers on the government payroll). And second, because they tie themselves into knots to avoid paying taxes, retaining countless bankers, lawyers, and lobbyists for this very purpose.

Even more important, many of these companies function as “natural monopolies”, operating in a positive feedback loop of increasing growth and value as more and more people contribute free content to their platforms. Companies like this are incredibly difficult to compete with, because as they grow bigger, they only get stronger.

Aptly characterising this “platform capitalism” in an article, Tom Goodwin writes: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

So what do these companies own? A platform. A platform that lots and lots of people want to use. Why? First and foremost, because they’re cool and they’re fun – and in that respect, they do offer something of value. However, the main reason why we’re all happy to hand over free content to Facebook is because all of our friends are on Facebook too, because their friends are on Facebook … because their friends are on Facebook.

Most of Mark Zuckerberg’s income is just rent collected off the millions of picture and video posts that we give away daily for free. And sure, we have fun doing it. But we also have no alternative – after all, everybody is on Facebook these days. Zuckerberg has a website that advertisers are clamouring to get onto, and that doesn’t come cheap. Don’t be fooled by endearing pilots with free internet in Zambia. Stripped down to essentials, it’s an ordinary ad agency. In fact, in 2015 Google and Facebook pocketed an astounding 64%of all online ad revenue in the US.

But don’t Google and Facebook make anything useful at all? Sure they do. The irony, however, is that their best innovations only make the rentier economy even bigger. They employ scores of programmers to create new algorithms so that we’ll all click on more and more ads. Uber has usurped the whole taxi sector just as Airbnb has upended the hotel industry and Amazon has overrun the book trade. The bigger such platforms grow the more powerful they become, enabling the lords of these digital feudalities to demand more and more rent.

Think back a minute to the definition of a rentier: someone who uses their control over something that already exists in order to increase their own wealth. The feudal lord of medieval times did that by building a tollgate along a road and making everybody who passed by pay. Today’s tech giants are doing basically the same thing, but transposed to the digital highway. Using technology funded by taxpayers, they build tollgates between you and other people’s free content and all the while pay almost no tax on their earnings.

This is the so-called innovation that has Silicon Valley gurus in raptures: ever bigger platforms that claim ever bigger handouts. So why do we accept this? Why does most of the population work itself to the bone to support these rentiers?

I think there are two answers. Firstly, the modern rentier knows to keep a low profile. There was a time when everybody knew who was freeloading. The king, the church, and the aristocrats controlled almost all the land and made peasants pay dearly to farm it. But in the modern economy, making rentierism work is a great deal more complicated. How many people can explain a credit default swap, or a collateralized debt obligation?  Or the revenue model behind those cute Google Doodles? And don’t the folks on Wall Street and in Silicon Valley work themselves to the bone, too? Well then, they must be doing something useful, right?

Maybe not. The typical workday of Goldman Sachs’ CEO may be worlds away from that of King Louis XIV, but their revenue models both essentially revolve around obtaining the biggest possible handouts. “The world’s most powerful investment bank,” wrote the journalist Matt Taibbi about Goldman Sachs, “is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

But far from squids and vampires, the average rich freeloader manages to masquerade quite successfully as a decent hard worker. He goes to great lengths to present himself as a “job creator” and an “investor” who “earns” his income by virtue of his high “productivity”. Most economists, journalists, and politicians from left to right are quite happy to swallow this story. Time and again language is twisted around to cloak funneling and exploitation as creation and generation.

However, it would be wrong to think that all this is part of some ingenious conspiracy. Many modern rentiers have convinced even themselves that they are bona fide value creators. When current Goldman Sachs CEO Lloyd Blankfein was asked about the purpose of his job, his straight-faced answer was that he is “doing God’s work”. The Sun King would have approved.

The second thing that keeps rentiers safe is even more insidious. We’re all wannabe rentiers. They have made millions of people complicit in their revenue model. Consider this: What are our financial sector’s two biggest cash cows? Answer: the housing market and pensions. Both are markets in which many of us are deeply invested.

Recent decades have seen more and more people contract debts to buy a home, and naturally it’s in their interest if house prices continue to scale now heights (read: burst bubble upon bubble). The same goes for pensions. Over the past few decades we’ve all scrimped and saved up a mountainous pension piggy bank. Now pension funds are under immense pressure to ally with the biggest exploiters in order to ensure they pay out enough to please their investors.

The fact of the matter is that feudalism has been democratised. To a lesser or greater extent, we are all depending on handouts. En masse, we have been made complicit in this exploitation by the rentier elite, resulting in a political covenant between the rich rent-seekers and the homeowners and retirees.

Don’t get me wrong, most homeowners and retirees are not benefiting from this situation. On the contrary, the banks are bleeding them far beyond the extent to which they themselves profit from their houses and pensions. Still, it’s hard to point fingers at a kleptomaniac when you have sticky fingers too.

So why is this happening? The answer can be summed up in three little words: Because it can.

Rentierism is, in essence, a question of power. That the Sun King Louis XIV was able to exploit millions was purely because he had the biggest army in Europe. It’s no different for the modern rentier. He’s got the law, politicians and journalists squarely in his court. That’s why bankers get fined peanuts for preposterous fraud, while a mother on government assistance gets penalised within an inch of her life if she checks the wrong box.

The biggest tragedy of all, however, is that the rentier economy is gobbling up society’s best and brightest. Where once upon a time Ivy League graduates chose careers in science, public service or education, these days they are more likely to opt for banks, law firms, or trumped up ad agencies like Google and Facebook. When you think about it, it’s insane. We are forking over billions in taxes to help our brightest minds on and up the corporate ladder so they can learn how to score ever more outrageous handouts.

One thing is certain: countries where rentiers gain the upper hand gradually fall into decline. Just look at the Roman Empire. Or Venice in the 15th century. Look at the Dutch Republic in the 18th century. Like a parasite stunts a child’s growth, so the rentier drains a country of its vitality.

What innovation remains in a rentier economy is mostly just concerned with further bolstering that very same economy. This may explain why the big dreams of the 1970s, like flying cars, curing cancer, and colonising Mars, have yet to be realised, while bankers and ad-makers have at their fingertips technologies a thousand times more powerful.

Yet it doesn’t have to be this way. Tollgates can be torn down, financial products can be banned, tax havens dismantled, lobbies tamed, and patents rejected. Higher taxes on the ultra-rich can make rentierism less attractive, precisely because society’s biggest freeloaders are at the very top of the pyramid. And we can more fairly distribute our earnings on land, oil, and innovation through a system of, say, employee shares, or a universal basic income. 

But such a revolution will require a wholly different narrative about the origins of our wealth. It will require ditching the old-fashioned faith in “solidarity” with a miserable underclass that deserves to be borne aloft on the market-level salaried shoulders of society’s strongest. All we need to do is to give real hard-working people what they deserve.

And, yes, by that I mean the waste collectors, the nurses, the cleaners – theirs are the shoulders that carry us all.

The Guardian

Millions of UK workers at risk of being replaced by robots, PwC study says – Larry Elliott. 

More than 10 million UK workers are at high risk of being replaced by robots within 15 years as the automation of routine tasks gathers pace in a new machine age.

A report by the consultancy firm PwC found that 30% of jobs in Britain were potentially under threat from breakthroughs in artificial intelligence (AI). In some sectors half the jobs could go.

The report predicted that automation would boost productivity and create fresh job opportunities, but it said action was needed to prevent the widening of inequality that would result from robots increasingly being used for low-skill tasks.

PwC said 2.25 million jobs were at high risk in wholesale and retailing – the sector that employs most people in the UK – and 1.2 million were under threat in manufacturing, 1.1 million in administrative and support services and 950,000 in transport and storage.

“There’s no doubt that AI and robotics will rebalance what jobs look like in the future, and that some are more susceptible than others.

What’s important is making sure that the potential gains from automation are shared more widely across society and no one gets left behind. Responsible employers need to ensure they encourage flexibility and adaptability in their people so we are all ready for the change.

In the future, knowledge will be a commodity so we need to shift our thinking on how we skill and upskill future generations. Creative and critical thinking will be highly valued, as will emotional intelligence.”

The Guardian

Preparing Our Economy And Society For Automation & AI – Robert Reich. 

Professor Reich comes to Google to discuss the impact of automation & artificial intelligence on our economy. He also provides a recommendation on how we can ensure future technologies benefit the entire economy, not just those at the top.

Social Europe

In the age of robots, our schools are teaching children to be redundant – George Monbiot. 

In the future, if you want a job, you must be as unlike a machine as possible: creative, critical and socially skilled. So why are children being taught to behave like machines?

Children learn best when teaching aligns with their natural exuberance, energy and curiosity. So why are they dragooned into rows and made to sit still while they are stuffed with facts?

We succeed in adulthood through collaboration. So why is collaboration in tests and exams called cheating?

The best teachers use their character, creativity and inspiration to trigger children’s instinct to learn. So why are character, creativity and inspiration suppressed by a stifling regime of micromanagement?

The Guardian

Change blue collar for new collar jobs – Samuel Wills. 

Artificial Intelligence, inequality and globalisation were central themes of the World Economic Forum in Davos last week.

Fearing that AI will destroy jobs, IBM CEO Ginni Rometty called for a future where jobs are not white collar or blue collar, but “new collar”.

While change is coming, these “new collar” will actually be quite old-fashioned. Teachers, nurses and waiters will all still be important as our economy continues to shift towards services.

Regardless of the jobs, technology will also continue to widen inequality if left unchecked.

We must learn the lessons of the industrial revolution and see the world’s labour movements return to their roots: sharing the proceeds of progress with all.

Thomas Mortimer once feared that saw mills would “exclude the labour of thousands of the human race”. That was in 1772 as the industrial revolution gained steam.

Historically, technology has replaced low-skilled jobs and complemented high-skilled ones.

The invention of tractors replaced workers with pitchforks, but increased the need for engineers.

Trade has had a similar effect. When we cut tariffs on textiles, some factories closed but Australian clothing designers still flourish.

When one job disappears, a new one is created in its place. During the industrial revolution, farm workers found jobs in factories. Centuries later, they found them in call centres.

We call this “structural transformation”, as economies transition from agriculture to manufacturing and then on to services.

Forty years ago, manufacturing made up 26 percent of GDP in New Zealand. By 2009, this industry made up 13 percent of GDP. Instead, the growth area is the services – doing things for other people.

What this means is these “new collar jobs” might actually be quite old-fashioned.

Although we will obviously need more programmers, computer scientists and engineers, we will also need plenty of teachers, nurses and policemen.

Services are not easily replaced.

As William Baumol pointed out in the 1960s, it still takes just as many people to perform a Beethoven string quartet as it did in the 1800s.

It’s easy to automate an espresso, but people still seem to prefer the personal touch.

AI will be hard pressed to replace the caring touch of a nurse on a sick patient’s cheek.

However, new technologies still pose a problem: inequality.

In Australia, the average individual real wage of the richest 10 per cent grew seven times faster than for the poorest 10 per cent in the 20 years from 1988.

Although technology increases the size of the economic pie, the slices aren’t shared equally.

When someone’s job is automated they could be unemployed for months while they search for work and retrain.

Older workers may never find another job. If they do, they could be competing with a host of people in the same situation.

The costs of progress are borne at the bottom of the income ladder, while the proceeds are reaped at the top.

New technology may change this. Although nurses and police officers may be safe, artificial intelligence has already made large gains in diagnosing illnesses, writing legal documents and designing machine components.

Doctors, lawyers and engineers are all now at risk.

The response

Regardless of which jobs are affected, we need to make sure the benefits of technology are shared equitably.

It won’t happen naturally. The owners of businesses and machines – capital – are in a better bargaining position than ever.

We must learn the lessons of the past. The industrial revolution gave birth to the labour movement, which argued for better working conditions, minimum wages and shorter hours.

All of these helped share the proceeds of progress. They also spurred growth.

Around the world modern labour movements have lost their way. Although making important gains on social issues, the left in the UK and US has flirted with protectionism and strayed from its core business.

That business is ensuring workers share in the proceeds of progress.

We must open our borders and our minds to the great benefits of globalisation and technology. We must also ensure the proceeds are shared.

Artificial intelligence and globalisation offer an exciting future, but if we are all to enjoy it we must look to the past.

By Samuel Wills, Assistant Professor/Lecturer in Economics, University of Sydney.

NZ Herald

You May Not Like Technology But It Likes You – Scott Reardon. 

In Greek mythology, Prometheus taught man how to farm. But when he gave man fire, the gods felt he had gone too far. And so as punishment, Zeus chained Prometheus to a rock where every day an eagle would come and eat his liver, which would regrow because he was immortal.

Prometheus’s story is about mankind’s dominion over its world and how much power is too much. But counterintuitively it is Zeus, not Prometheus, who many artists and writers in the last thousand years have sided with. The story is relevant today because humanity is at a turning point, and two opposing forces are locked in a war that is just beginning to come into being. On one side are our innovations and the power that comes with them, and on the other side is the fact that when it comes to us ourselves, there seems to be no innovation.

For tens of thousands of years, technology has been directed outward—on the world at large. Now, for the first time in human history, technology has reached a point where it can be directed inward—back on its creators. Technology has found something new it would like to change: Us.

In 2010, researchers at the University of Colorado performed what they thought would be an unremarkable experiment on lab mice. They injured the mice’s limbs and injected them with stem cells to heal the damage. Then something strange happened. The muscles in those little limbs nearly doubled in size and strength. Not only that, the muscles stayed that way for the life of each mouse, defying even the aging process itself. Essentially the researchers had accidentally created a race of “super-mice.”

Another experiment in 2001 involved injecting human stem cells, of all things, into the brains of aging mice. Soon after, the mice began to perform better on the Morris water maze test. In other words, the stem cells had made them smarter.

When people think of stem cells, they usually think of a potential cure for diseases like Parkinson’s. But there is another, potentially far darker, use for stem cells, and that is on people who are perfectly healthy.

The Guardian

Progress Abandoned – Jean Pisani-Ferry. 

Margaret Thatcher and Ronald Reagan are remembered for the laissez-faire revolution they launched in the early 1980s. They campaigned and won on the promise that free-market capitalism would unleash growth and boost prosperity. In 2016, Nigel Farage, the then-leader of the UK Independence Party (UKIP) who masterminded Brexit, and US President-elect Donald Trump campaigned and won on a very different basis: nostalgia. Tellingly, their promises were to “take back control” and “make America great again” – in other words, to turn back the clock.

As Columbia University’s Mark Lilly has observed, the United Kingdom and the US are not alone in experiencing a reactionary revival. In many advanced and emerging countries, the past suddenly seems to have much more appeal than the future. In France, Marine Le Pen, the nationalist rights candidate in the upcoming presidential election, explicitly appeals to the era when the French government controlled the borders, protected industry, and managed the currency. Such solutions worked in the 1960s, the National Front leader claims, so implementing them now would bring back prosperity.

Obviously, such appeals have struck a chord with electorates throughout the West. The main factor underlying this shift in public attitudes is that many citizens have lost faith in progress. They no longer believe that the future will bring them material improvement and that their children will have a better life than their own. They look backward because they are afraid to look ahead.

Social Europe

Japanese company replaces office workers with artificial intelligence – Justin McCurry. 

A future in which human workers are replaced by machines is about to become a reality at an insurance firm in Japan, where more than 30 employees are being laid off and replaced with an artificial intelligence system that can calculate payouts to policyholders.

Fukoku Mutual Life Insurance believes it will increase productivity by 30% and see a return on its investment in less than two years. 

The system is based on IBM’s Watson Explorer, which, according to the tech firm, possesses “cognitive technology that can think like a human”, enabling it to “analyse and interpret all of your data, including unstructured text, images, audio and video”.

The technology will be able to read tens of thousands of medical certificates and factor in the length of hospital stays, medical histories and any surgical procedures before calculating payouts. 

The Guardian

47% of Jobs Will Disappear in the next 25 Years, According to Oxford University – Philip Perry. 

The Trump campaign ran on bringing jobs back to American shores, although mechanization has been the biggest reason for manufacturing jobs’ disappearance. Similar losses have led to populist movements in several other countries. But instead of a pro-job growth future, economists across the board predict further losses as AI, robotics, and other technologies continue to be ushered in. What is up for debate is how quickly this is likely to occur.

Now, an expert at the Wharton School of Business at the University of Pennsylvania is ringing the alarm bells. According to Art Bilger, venture capitalist and board member at the business school, all the developed nations on earth will see job loss rates of up to 47% within the next 25 years, a statistic from a recent Oxford University study. “No government is prepared, ” The Economist reports. These include blue and white collar jobs. So far, the loss has been restricted to the blue collar variety, particularly in manufacturing.

To combat “structural unemployment” and the terrible blow it is bound to deal the American people, Bilger has formed a nonprofit called Working Nation, whose mission it is to warn the public and to help make plans to safeguard them from this worrisome trend. Not only is the entire concept of employment about to change in a dramatic fashion, the trend is irreversible. The venture capitalist called on corporations, academia, government, and nonprofits to cooperate in modernizing our workforce

To be clear, mechanization has always cost us jobs. The mechanical loom for instance put weavers out of business.

But it’s also created jobs. Mechanics had to keep the machines going, machinists had to make parts for them, and workers had to attend to them, and so on. A lot of times those in one profession could pivot to another. At the beginning of the 20th century for instance, automobiles were putting blacksmiths out of business. Who needed horse shoes anymore? But they soon became mechanics. And who was better suited?

Not so with this new trend. Unemployment today is significant in most developed nations and it’s only going to get worse. By 2034, just a few decades, midlevel jobs will be by and large obsolete. So far the benefits have only gone to the ultra-wealthy, the top 1%. This coming technological revolution is set to wipe out what looks to be the entire middle class. Not only will computers be able to perform tasks more cheaply than people, they’ll be more efficient too.


Accountants, doctors, lawyers, teachers, bureaucrats, and financial analysts beware: your jobs are not safe. According to The Economist, computers will be able to analyze and compare reams of data to make financial decisions or medical ones. There will be less of a chance of fraud or misdiagnosis, and the process will be more efficient. Not only are these folks in trouble, such a trend is likely to freeze salaries for those who remain employed, while income gaps only increase in size.
You can imagine what this will do to politics and social stability.

Mechanization and computerization cannot cease. You can’t put the genie back in the bottle. And everyone must have it, eventually. The mindset is this: other countries would use such technology to gain a competitive advantage and therefore we must adopt it. Eventually, new tech startups and other business might absorb those who have been displaced. But the pace is sure to move far too slowly to avoid a major catastrophe.
According to Bilger, the problem has been going on for a long time. Take into account the longevity we are enjoying nowadays and the US’s broken education system and the problem is compounded.
One proposed solution is a universal basic income doled out by the government, a sort of baseline one would receive for survival. After that, re-education programs could help people find new pursuits. Others would want to start businesses or take part in creative enterprises. It could even be a time of the flowering of humanity, when instead of chasing the almighty dollar, people would able to pursue their true passions.

BigThink

The Second Machine Age – Erik Brynjolfsson and Andrew McAfee. 

For many thousands of years, humanity was a very gradual upward trajectory. Progress was achingly slow, almost invisible. Animals and farms, wars and empires, philosophies and religions all failed to exert much influence.

But just over two hundred years ago, something sudden and profound arrived and bent the curve of human history—of population and social development—almost ninety degrees.

The Industrial Revolution, which was the sum of several nearly simultaneous developments in mechanical engineering, chemistry, metallurgy, and other disciplines.

We can be even more precise about which technology was most important. It was the steam engine or, to be more precise, one developed and improved by James Watt and his colleagues in the second half of the eighteenth century.

Even though [the steam] revolution took several decades to unfold . . . it was nonetheless the biggest and fastest transformation in the entire history of the world.

It allowed us to overcome the limitations of muscle power, human and animal, and generate massive amounts of useful energy at will. This led to factories and mass production, to railways and mass transportation. It led, in other words, to modern life.

The ability to generate massive amounts of mechanical power was so important that it made a mockery of all the drama of the world’s earlier history.

Now comes the second machine age. Computers and other digital advances are doing for mental power—the ability to use our brains to understand and shape our environments—what the steam engine and its descendants did for muscle power.

Mental power is at least as important for progress and development—for mastering our physical and intellectual environment to get things done—as physical power. So a vast and unprecedented boost to mental power should be a great boost to humanity, just as the earlier boost to physical power so clearly was.

We’re at an inflection point—a point where the curve starts to bend a lot—because of computers. We are entering a second machine age.

The transformations brought about by digital technology will be profoundly beneficial ones.

As Martin Weitzman puts it, “the long-term growth of an advanced economy is dominated by the behavior of technical progress.” Technical progress is improving exponentially.

Digitization is going to bring with it some thorny challenges. 

Rapid and accelerating digitization is likely to bring economic rather than environmental disruption, stemming from the fact that as computers get more powerful, companies have less need for some kinds of workers. Technological progress is going to leave behind some people, perhaps even a lot of people, as it races ahead.

There’s never been a better time to be a worker with special skills or the right education, because these people can use technology to create and capture value. However, there’s never been a worse time to be a worker with only ‘ordinary’ skills and abilities to offer, because computers, robots, and other digital technologies are acquiring these skills and abilities at an extraordinary rate.

———-

from The Second Machine Age by Erik Brynjolfsson and Andrew McAfee

Let robots take the Xmas stress – Michelle Dickinson. 

Cooking Christmas dinner for the family is a huge responsibility – in fact research has shown it to be the most stressful meal of the year to prepare.

The fear of dry turkey, limp broccoli and soggy pavlova are enough to make even the most experienced cook think seriously about restaurant reservations for next year.

All that pressure may soon be a thing of the past, however, thanks to a new generation of smart kitchen appliances. These devices promise Christmas dinner – and all your other meals – prepared perfectly every time.

Next year the Moley Robotics robochef goes on sale to the public. Two robotic arms installed above a cooking area with a sink, oven and hob are designed to revolutionise cooking as we know it.

The robot’s anthropomorphic hands appear uncannily human-like when cooking. Using 3D motion cameras the intricate movements of a human chef are captured electronically, and this data is then translated into movements by the robot. Using 20 motors, 24 joints and 129 sensors it can hold pots, pick up and use kitchen utensils, stack dishes and squeeze ingredient bottles.

With its cooking abilities based directly on mimicry of human skills, the robochef is only as good as the human that was recorded.

NZ Herald 

Worldwide productivity is grinding to a halt – Satyajit Das. 

Thomas Malthus was wrong for one simple reason. Humans have survived his 1798 forecast that growing populations wouldn’t be able to feed themselves because innovation and productivity gains allowed them to produce more and more with the same amount of labor and capital: Irrigation, fertilizers, higher-yielding plant species and mechanization have enabled farmers to grow 5 to 6 times the amount of grain from the same piece of land as a century ago. The problem is that similar productivity gains may no longer be possible – or effective.
There’s also general agreement that productivity gains are flatlining. In advanced economies, productivity growth has fallen below 1 percent annually, significantly lower than the 3 to 4 percent common in postwar decades and even less than the 2 to 2.5 percent of the last decades of the 20th century. Similar trend lines are beginning to appear in developing nations. Combined with stagnant or declining workforces, slowing productivity gains are a key factor suppressing growth worldwide.
What no one can agree on is why this is happening.

NZ Herald