Taxi drivers in London, Paris and Madrid have been protesting against the private car service Uber. Uber enables you to order and pay for a driver from your smartphone. It differs from Hailo – extremely popular here in Ireland – in that unlike simply optimising the existing taxi market, it circumvents it entirely. The story is a familiar one: new technologies have winners and losers. Entrenched interests resist for a time, protected by a mixture of legacy benefits, regulations and sentiment, before crumbling under the totalising weight of economic efficiency. Politicians offer a few platitudes to the disenfranchised group but concede that the creative destruction wrought by new technologies is ultimately societally advantageous. Technology creates new jobs faster than it makes old ones obsolete.
You could argue that the model Uber embodies displaces some workers (in this case taxi drivers) but creates new jobs in their place (anyone with a smartphone can theoretically become a private driver). The rise and success of Uber – valued at $18.2 in June pre-IPO – is just the tip of a very large iceberg, however. Google’s self-driving car has driven over 300,000 accident-free miles along Californian highways whilst every major car manufacturer is investing in some kind of automated vehicle. The advantages of a true automobile are manifest. Most road accidents are caused by human error. Machines make much better drivers than people because of their capacity to more efficiently process large amounts of complex data. In addition to causing fewer fatalities and injuries, self-driving cars make better drivers, reducing congestion and thus pollution. Of course, there are roadblocks. How do computers deal with ethical dilemmas? In the small but still greater than zero pool of accidents involving self-driving cars, who or what is liable? Regulation, as always, lags behind technology, but will eventually catch up. Self-driving cars are already with us and will become the norm sooner than we think. And when then that happens, they will put 73 million people – all the taxi drivers, truckers and chauffeurs of the global transportation industry – out of a job.
What we’re witnessing is a “second machine age”. Digital technologies are rapidly replacing labour as an input in both the production process and the service industry. After the initial sunk cost, the marginal cost of new hardware declines as scale rises. Moreover, the cost of replicating software – that which carries out functions of the new hardware – is essentially non-existent. This has some significant advantages: not only does it make the whole production process cheaper and quicker but it also more closely aligns production with actual, rather than forecasted, demand. Think of 3D printing, which could re-localise complex global supply chains by reducing the need to centralise manufacturing for high-volume, low-cost production. Largescale shipping and warehouse inventories will be replaced by smaller delivery methods such as Amazon or FedEx. UPS recently announced a partnership with Stratasys to provide 3D printers in UPS stores across the US, whilst a Dutch architecture firm is already printing 3D canal boats in Amsterdam. Thus in this new production model, waste from lengthy supply chains and inaccurate forecasting is massively reduced.
At its height, Kodak employed 145,000 people; it filed for bankruptcy in 2012. In the same year, Facebook bought Instagram for $1 billion – it has about 11 employees. WhatsApp has 55 employees and was bought by Facebook for $17 billion earlier this year. The value is not in people anymore; it’s in capital-intensive technology.
This second machine age is different from previous waves of technological change in two key respects. Firstly, the rate of change is accelerating. The history of the mechanisation of agriculture is one of incremental change over the past several thousand years from the first domestication of plants and animals to the 21st century, during which the majority of people have moved off the land and now work in the (largely urban) service sector. Self-driving cars, on the other hand, possess the potential to revolutionise the transportation sector in a few short decades. Secondly, white-collar jobs are at as much risk as blue-collar jobs. A recent study by two Oxford economists (Frey, Osborne, 2013) analysed 702 occupations and predicted that 47% of total US employment is susceptible to computerisation. Software can automate whole swathes of accounting, taxation and legal work. Other industries too: a Quill robotic journalist could probably write this article better than me. Narrative Science has produced an algorithm that writes several articles you’ve already read.
A degree from a credentialed institution no longer provides you with insulation from such technological-biased change. Those who can work well with machines and think of new things for them to do will be amply compensated in this brave new world, whilst those who can’t or don’t will lag behind. This will accelerate the trend of superstar labour markets in existing fields such as sports and entertainment, and extend them to nearly all other sectors. The power law underlying this trend will see a disproportionate level of gains accrue to a small minority (the economist Tyler Cowen thinks the latter will be roughly 15% of the population).
The implications of this second machine age are thus terminally high unemployment and rising levels of inequality. In the future, “humans need not apply.” If this vision of the future seems overly grim, then that’s because it is. We have solved the perennial problem of human economic history, that of production – although we have not exported the solution to most of the world yet. We have the agency to change that however, and to shape the kind of future we want to live in and our children to inherit. However, we need to think critically – now – about what a post-scarcity world looks like, a world in which nearly all types of work that we can conceive, work that we haven’t yet conceived, can be automated by machines; a world without work as we now know it. What does a post-scarcity, post-work world look like? We need to start thinking seriously about new occupations for the millions of workers about to be displaced by technology. More fundamentally, we need to think about the purpose and meaning of human life in a world without work.
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