Plutocratic Insurgency Note No. 3: No Shoring: Job Obsolescence Via Artificial Intelligence (AI) and Robotics

Plutocratic Insurgency Note No. 3: No Shoring: Job Obsolescence Via Artificial Intelligence (AI) and Robotics

Robert J. Bunker and Pamela Ligouri Bunker 

Key Information: Cade Metz, “The AI Threat is Not SKYNET. It’s the End of the Middle Class.” Wired.  10 February 2017, https://www.wired.com/2017/02/ai-threat-isnt-skynet-end-middle-class/.

...At a time when the Trump administration is promising to make America great again by restoring old-school manufacturing jobs, AI researchers aren’t taking him too seriously. They know that these jobs are never coming back, thanks in no small part to their own research, which will eliminate so many other kinds of jobs in the years to come, as well. At Asilomar, they looked at the real US economy, the real reasons for the “hollowing out” of the middle class. The problem isn’t immigration—far from it. The problem isn’t offshoring or taxes or regulation. It’s technology…

In the US, the number of manufacturing jobs peaked in 1979 and has steadily decreased ever since. At the same time, manufacturing has steadily increased, with the US now producing more goods than any other country but China. Machines aren’t just taking the place of humans on the assembly line. They’re doing a better job. And all this before the coming wave of AI upends so many other sectors of the economy. “I am less concerned with Terminator scenarios,” MIT economist Andrew McAfee said on the first day at Asilomar. “If current trends continue, people are going to rise up well before the machines do.”

McAfee pointed to newly collected data that shows a sharp decline in middle class job creation since the 1980s. Now, most new jobs are either at the very low end of the pay scale or the very high end. He also argued that these trends are reversible, that improved education and a greater emphasis on entrepreneurship and research can help feed new engines of growth, that economies have overcome the rise of new technologies before. But after his talk, in the hallways at Asilomar, so many of the researchers warned him that the coming revolution in AI would eliminate far more jobs far more quickly than he expected…

Key Information: Christopher Mims, “Technology’s Long-Term Toll on the Middle Class.”  The Wall Street Journal. 23 January 2017: B-1, B-4, https://www.wsj.com/articles/technology-vs-the-middle-class-1485107698.

…When workers lose a middle-class manufacturing or clerical job and end up in the service sector, the effect on their wages, benefits and job security contributes to what economists call polarization. In a polarized labor market, a minority of highly skilled employees—the ones who can leverage technology to be more productive—effectively replace the labor of others and are paid accordingly. Everyone else sees their fortunes dwindle.

Polarization has hit the middle class hard, but the devaluation of human labor will continue up the income ladder, says Branko Milanovic, an economist who specializes in income inequality.

That’s partly because, more than ever, we have the ability to eliminate higher-paying knowledge work. Ian Barkin, co-founder of Symphony Ventures, which helps some of the world’s largest companies automate everything from call centers to human-resource departments, says this phenomenon is known as “no-shoring.” The idea is that digitizing back-office tasks brings them back to the country in which a company operates, but without bringing back any jobs…

Key Information: Wolfgang Lehmacher, “Don’t Blame China For Taking U.S. Jobs.” Fortune. 8 November 2016, http://fortune.com/2016/11/08/china-automation-jobs/.

…The U.S. has lost 5 million factory jobs since 2000. And trade has indeed claimed production jobs - in particular when China joined the World Trade Organization in 2001. Nevertheless, there was no downturn in U.S. manufacturing output. As a matter of fact, U.S. production has been growing over the last decades. From 2006 to 2013, “manufacturing grew by 17.6%, or at roughly 2.2% per year,” according to a report from Ball State University. The study reports as well that trade accounted for 13% of the lost U.S. factory jobs, but 88% of the jobs were taken by robots and other factors at home.

If not China, what then explains these jobs losses? It’s simple: factories don't need as many workers as they used to, because robots increasingly do the work.

Investment in automation and software has doubled the output per U.S. manufacturing worker over the past two decades. Robots are replacing workers, regardless of trade at an accelerating pace. “The real robotics revolution is ready to begin” writes BCG and predicts that “the share of tasks that are performed by robots will rise from a global average of around 10% across all manufacturing industries today to around 25% by 2025.”…

Key Information:  “Robots will eliminate 6% of all US jobs by 2021, report says.” The Guardian. 13 September 2016, https://www.theguardian.com/technology/2016/sep/13/artificial-intelligence-robots-threat-jobs-forrester-report.

By 2021, robots will have eliminated 6% of all jobs in the US, starting with customer service representatives and eventually truck and taxi drivers. That’s just one cheery takeaway from a report released by market research company Forrester this week.

These robots, or intelligent agents, represent a set of AI-powered systems that can understand human behavior and make decisions on our behalf. Current technologies in this field include virtual assistants like Alexa, Cortana, Siri and Google Now as well as chatbots and automated robotic systems. For now, they are quite simple, but over the next five years they will become much better at making decisions on our behalf in more complex scenarios, which will enable mass adoption of breakthroughs like self-driving cars.

These robots can be helpful for companies looking to cut costs, but not so good if you’re an employee working in a simple-to-automate field…

…“Six percent is huge. In an economy that’s really not creating regular full-time jobs, the ability of people to easily find new employment is going to diminish. So we will have people wanting to work and struggling to find jobs because the same trends are beginning to occur in other historically richer job creation areas like banking, retail and healthcare,” said Andy Stern, the former president of the Service Employees International Union.

“It’s an early warning sign and I think it just portends a massive wind of change in the future.”…

Who: Artificial intelligence (AI) and robots utilized by businesses and multinational corporations.

What: The ongoing elimination of American manufacturing, transportation, and customer service jobs as well as white collar and knowledge worker jobs as a component of globalization and the information revolution.    

When: Contemporary era; since the 2010s increasing concerns expressed over artificial intelligence (AI) and robot use in the economy having reached a  ‘tipping point’ where more human jobs were being lost than being gained by their ever growing utilization.     

Where: Within the United States.

Why: The result of the replacement of human labor by machine labor (i.e. AI and robotics) in order to increase productivity and lower costs; the transition from human labor to advanced software and automation processes to achieve higher corporate profitability. A manifestation of post-industrial and cyber based economies in advanced 21^st century societies.    

Analysis:  The migration of US manufacturing jobs overseas to China, Mexico, and other locales—commonly known as ‘offshoring’—has been one of the flashpoints of globalization for US workers. Images of the Rust Belt towns in the mid-West and Eastern US—exemplified by Detroit and other hollowed out and depopulated city cores—as well as concerns over free trade agreements (NAFTA; North American Free Trade Agreement and TTP; Trans-Pacific Partnership) and jokes about Indian call center employees trying to convince customers that they are based in the US are all components of the greater offshoring and globalization milieu. While much talk has focused on the critical need for the reshoring (aka; onshoring or repatriation) of US jobs in order to bolster the thinning US middle class—particularly in the present administration but a public policy issue also visibly cognizant in earlier ones—such efforts are not gaining momentum. The reason is that, rather than the reshoring of jobs, we have increasingly been witnessing the no shoring of jobs. The no shoring concept—articulated by Ian Barkin (in The Wall Street Journal article cited in this note)—is the process of talking off shored American jobs and bringing them back to the US for artificial intelligence programs and robotic lines to do. The net result is that the old job remains lost and not only have US workers lost this employment option but foreign off shore workers have now lost that job opportunity as well. This increasing trend is representative of the dystopian nightmare laid out in Player Piano—a 1952 science fiction novel written by Kurt Vonnegut. It results in a bifurcated society in which the haves—engineers, managers, and capitalists (corporate owners)—have productive lives while the lower classes—whose jobs have been automated—have little purpose for their existence. Such a scenario is representative of the crisis of post Modern capitalism in which state moderated capitalism, which is meant to protect middle class structures and provide public welfare benefits, is being subsumed by larger predatory and globalized multinational corporate activities. While the US is presently nowhere near a dystopian Player Piano future, the no shoring trend is of immense concern. Ultimately, it suggests that the new administration may have little to no power to institute any form of meaningful reshoring programs for US workers and the fragmentation of the middle class will continue unabated. If such fragmentation continues, it will undermine the American societal mythos derived from the Horatio Alger archetype of poor yet hard working, honest, and courageous boys (and girls) gaining upward mobility into the American middle class. While such a mythos may at first appear historically trite, socio-economic mobility has been a defining characteristic of American society for well over a century. The increased ‘thinning’ of the middle class—resulting from both the off shoring and no shoring of jobs—will mean that those born into the lower class will increasingly have fewer and fewer opportunities to leave it. Socio-economic mobility in American society is a defining component of the ‘pursuit of happiness’ and an unalienable right and, if that is taken away from the citizenry, the social contract between the state and the governed will be gravely imperiled.

Further Reading

Jagdish N. Bhagwati and Alan S. Blinder, Offshoring of American Jobs: What Response from U.S. Economic Policy? Benjamin M. Friedman, ed., Cambridge: MIT Press, 2009.

Martin Ford, The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future. Charleston: CreateSpace, 2009.

Martin Ford, Rise of the Robots: Technology and the Threat of a Jobless Future. New York: Basic Books, 2016 (Reprint).

Jerry Kaplan, Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial Intelligence. New Haven: Yale University Press, 2016 (Reprint).

Disclaimer: All opinions are strictly those of the authors and in no way reflect the viewpoints of any U.S. Governmental, academic, or corporate entity.