In the article, this is often somewhat simplistically cast in shorthand as human work displaced by computers but it is far more complex than that. Say you are a utility who wants to digitize all your paper field plats so that your field personnel can more easily access information about where lines are laid and transformers placed for better routing of field crews for maintenance. All well and good and you get the 10% improvement in maintenance crew productivity you were looking for. But now that the records are digitized for mapping purposes, they can also be used for system engineering optimization. You can run all sorts of simulations for load capacity and you find that with a few strategic investments and relocations of critical facilities, you are able to drop your maintenance requirements by 30%. Nothing to do with people working more productively; there is simply less work that needs to be done, the discovery of which was contingent on the original digitizing of data.
As regulations increase labor costs, there will always be an economic incentive to substitute technology and capital for labor, especially when the cost of capital is low and the cost of labor is high. This is not simply a unitary phenomenon. Once you have learned to displace expensive skilled labor in a manufacturing plant, you have scaled a big learning curve that makes it cheaper to then automate semi-skilled work. If labor costs keep rising, you keep substituting more and more technology/capital and the average cost of displacement becomes cheaper and cheaper because you keep adding to the knowledge base of how to mechanize what once was human activity.
Displacement results not just in lower costs but usually also higher average quality and consistency.
From the article:
The contention that automation and digital technologies are partly responsible for today’s lack of jobs has obviously touched a raw nerve for many worried about their own employment. But this is only one consequence of what Brynjolfsson and McAfee see as a broader trend. The rapid acceleration of technological progress, they say, has greatly widened the gap between economic winners and losers—the income inequalities that many economists have worried about for decades. Digital technologies tend to favor “superstars,” they point out. For example, someone who creates a computer program to automate tax preparation might earn millions or billions of dollars while eliminating the need for countless accountants.
New technologies are “encroaching into human skills in a way that is completely unprecedented,” McAfee says, and many middle-class jobs are right in the bull’s-eye; even relatively high-skill work in education, medicine, and law is affected. “The middle seems to be going away,” he adds. “The top and bottom are clearly getting farther apart.” While technology might be only one factor, says McAfee, it has been an “underappreciated” one, and it is likely to become increasingly significant.
Not everyone agrees with Brynjolfsson and McAfee’s conclusions—particularly the contention that the impact of recent technological change could be different from anything seen before. But it’s hard to ignore their warning that technology is widening the income gap between the tech-savvy and everyone else. And even if the economy is only going through a transition similar to those it’s endured before, it is an extremely painful one for many workers, and that will have to be addressed somehow. Harvard’s Katz has shown that the United States prospered in the early 1900s in part because secondary education became accessible to many people at a time when employment in agriculture was drying up. The result, at least through the 1980s, was an increase in educated workers who found jobs in the industrial sectors, boosting incomes and reducing inequality. Katz’s lesson: painful long-term consequences for the labor force do not follow inevitably from technological changes.
Brynjolfsson himself says he’s not ready to conclude that economic progress and employment have diverged for good. “I don’t know whether we can recover, but I hope we can,” he says. But that, he suggests, will depend on recognizing the problem and taking steps such as investing more in the training and education of workers.
“We were lucky and steadily rising productivity raised all boats for much of the 20th century,” he says. “Many people, especially economists, jumped to the conclusion that was just the way the world worked. I used to say that if we took care of productivity, everything else would take care of itself; it was the single most important economic statistic. But that’s no longer true.” He adds, “It’s one of the dirty secrets of economics: technology progress does grow the economy and create wealth, but there is no economic law that says everyone will benefit.” In other words, in the race against the machine, some are likely to win while many others lose.
This graphic shows the measured pace of technology adoption which has been fast and getting faster over the years. Note how the S-curves are getting steeper.
This interesting graphic shows the fate of routine and nonroutine manual, interactive, cognitive and analytic labor over forty years.
My read is that anything that can be converted into an algorithm (whether manual or cognitive labor) is toast. Sooner or later, the machines will rule. Why? Cost of labor and the extra costs we keep legislating on to labor.
Nonroutine work is where you want to be, particularly unpredictable nonroutine work.
My guess. The technology displacement will roll on with little interruption. The forces of globalization, competition and convergence will force that.
In the near term, the cognitive elite will continue to disproportionately benefit through exceptional cognitive and cultural capabilities. But the churn and erosion that once haunted primarily those moving from rural to urban and those lower skilled manufacturing workers in the eighties threatened by automation and outsourcing, have in the nineties and 2000s worked their way up the cognitive pyramid from blue collar and well into the trenches of white collar work. Becoming an accountant or lawyer used to be a safe pathway into the middle and upper middle class. Software and outsourcing is gutting both those professions. Those at the top, the very best and most productive, will always starve last but the gap between adequately average and best will get vastly wider.
The pressure that will be placed on middle and lower class participants in the labor market will be unrelenting and cruel. But it is impersonal and unavoidable. Who will transition? The cognitive elite will always do well.
Below that, those that have firm grounding in classic middle class values (diligence, future orientation, generosity, community commitment, cautious risk taking, saving, valuation of education, responsibility, etc.) will make a rough but ultimately successful and rewarding transition where they are providing variable services, providing them locally and focusing on specializations that are not easily automated or outsourced.
The currently poor and those without the foundation of productive cultural value attributes are the ones most likely to suffer the greatest. It is those we most need to help and currently who are least likely to receive the necessary help. Not because the material resources aren't being made available, they are. But because it will require changes in behaviors and values (not just skills) in order to be productive in the modern, globalized, interconnected, always connected, fast changing, uncertain economy. People will have to be coached and mentored into the new environment of productivity. Giving personal time is always the biggest barrier to transition and people are deeply reluctant to change their personal habits, particularly if aspects of those behaviors are part of their self-identification. These are delicate waters in which the accomplished are unlikely to wish to swim. But if they don't, then we abandon those most in need of making the transition.
Historically the labor premium was roughly paid for demonstrated skills, experience and values in that order. Values were a given, experience was earned with time and demonstrated skills were the hardest thing to come by.
I think in the future one's productivity is going to be much more determined by values, experience and skills. If that is true, those with variant and/or less productive value sets will suffer.
I am confident that the US will make the transition into the changed modern economy but we will be able to do that in a better or worse fashion.
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