Thursday, October 11, 2012

Where I See Us Heading

Right now everyone seems to be debating politics and talking about why the candidate they dislike is so bad. A few people are also talking about why their candidate is any good. So I thought I would step to the side and write a few words about my view of what the near future holds, and why I think both major candidates, and indeed both major parties in the US, are pretty much worthless.

Everything centers on the economy and both parties say they want to get people back to work. My take is that both will fail, and the efforts they put into it are not only futile, but likely a waste of resources. The reason, is that technology has made many jobs obsolete, and it is going to make many more jobs obsolete in the near future.

I know that the standard economist response to technological unemployment is simply to point to the Luddite fallacy and say that technology has only created more jobs all through history. I have another blog post in preparation where I will argue that this is one place where you can't just go off history. Pure logic can show you that the Luddite fallacy breaks down at some point. So the only question is, are we at that point?

I would also point out that I don't think there is anything fundamentally bad about there not being enough jobs. There is nothing about the human condition which I feel implies we have to work to have a good life, at least not the type of work we do for money in the modern world. If you enjoy gardening keep doing it. However, that doesn't mean that humans have to be employed in the manual labor of growing food when they don't feel like it. Similar logic applies to many other areas.

Today
I write this post just after the September 2012 unemployment figures have come out. The U3 unemployment level for the US sits at 7.8%. This is actually a pretty significant drop from previous months. Here you can see a plot from Google's public data explorer showing this.
This seems like good news. However, the U3 doesn't count lots of people. The U6 is a much better measure and it didn't budge in September 2012, holding steady at 14.7%
Probably the best measure of what is happening with jobs is just looking at the labor force. Both political parties are promising to "make more jobs". That is what has to happen if you want to really drop unemployment. You have to have more jobs created than what is needed to balance the increase in population. Here is what Google public data explorer can tell you about the number of people working in the US. This is a plot of the labor force. Note that it hasn't budged since 2008.
The population has been changing though. The plot below of data from the US Census Bureau shows that the population simply keeps rising even as the labor force has completely flat lined.
In many ways the US is doing better than other parts of the developed world. I heard a report on NPR yesterday that Spain is up to 25% unemployment with the rate being over 50% for those in their 20s. I don't know if the "unemployment" they measure is closer to our U3 or U6, or if it is something completely different. However, those are pretty staggering number.

There are lots of reasons why things are this way today and technological unemployment is not the primary cause, IMO. However, it is growing in importance, and it is why I don't expect things to turn around. In fact, they will get worse. I think it will also break some standard economic ideas. For example, "trickle down" effects disappear if you stop paying money to people lower on the wage scale because you automate away all of their jobs. This line of reasoning could go into a whole different direction looking at things like median wages and quartiles vs. corporate profits, but that isn't the objective of this post.

While politicians and their fans can point fingers all they want about why the labor force isn't growing, none of them wants to tell the real truth. This is because the truth is that they are impotent to change things. Businesses today don't really need many people. They especially don't need people with the skills that most people in this country have. Instead, they can get more done by investing in technology and augmenting the employees that they have. Sometimes, that technology can even replace those people. I'll point the interested reader to two articles here. My Google+ feed is full of such things, but these two should be sufficient for this post.

First, I point to a recent article in the NY Times, "When Job-Creation Engines Stop at Just One". The rhetoric I hear from the GOP is that if we reduce the barriers to starting companies, those companies will make new jobs. I will point to this article and disagree. Most start ups are forming today with a lot fewer employers than they used to. I see no reason to believe that removing barriers to forming businesses would change this. It simply costs less to use technology and contract workers than it does to hire full time employees.

The second article is a bit older. It is called "9.2% Unemployment? Blame Microsoft.". It appeared on the Forbes site in the second half of 2011. Clearly the U3 unemployment rate has fallen since then, but as you can see from the charts above, that isn't because the labor force has grown. There is one particular quote from this article that I want to highlight.
So here’s the cold, hard truth about why you're unemployed:  most businesses don't need you any more. We can do just as much, if not more, without you.
This is the real reason why politicians can make all types of promises about employment and jobs, but none of their promises will come true. There is no policy change that can make people more useful to businesses overnight. The closest you can come to that would be to make people more useful per dollar spent. That would be policies like removing forced benefits and dropping minimum wage so that employers can pay human employees significantly less than they do today. This is something the GOP would actually be willing to do. Even that is a stop-gap measure that will prove ineffective in the longer term. Education is far more beneficial if you go beyond a few years, but even that has limited effectiveness in the long run. Education is something the Democrats will support. Neither is going to push for the changes I think we need to deal with what I'm going to describe below.

Before I start looking forward a bit, I want to point out one more link. There is to a page at the Bureau of Labor Statistics called "Employment and wages for the largest and smallest occupations".  I will refer back to the top table on this page in my points below. Note that the top 15 occupations in the US account for 27% of the labor force. If you were to wipe out most of these, even if not a single other job category was hit, our unemployment rate would look at lot more like that of Spain. So now let's look at why I think that is going to happen, and how technology that will come out at different points in the future is going to drive it.

1-5 years
What should probably scare you the most about that list of largest jobs is that the #1 item on the list is already under heavy assault. Unfortunately, the BLS list is for May 2011 and they haven't come out with a newer one. When this came out, there were still people employed at Borders. Some might argue that you can't point to a single employer because companies go under all the time. However, no one should argue that online sales aren't hitting retail sales in a huge way. The plot below from WolframAlpha only goes to 2009, but you can see the trend there and that was even longer before a giant like Borders fell.
Retail isn't going to go away, but it is going to shrink. Amazon doesn't employ people to tell you about their new products or run the cash registers. Speaking of running cash registers, that is #2 on the list and that is in the same boat.

Of course, some people like to go handle things and try them on. One might argue that makes things like clothing retailers safe. The fact that they aren't is brought home by this article on virtual dressing rooms from CES 2012. Within 5 years I fully expect that many people will be ordering clothes that fit them perfectly well, in fact better than what they could have gotten in a store, using a system like this.

Another area that is going to undergo significant change in the next five years is health care. I don't know how much it will hit the ranks of RNs who come in at #5 on the employment list, but if personalized health leads to fewer in-person visits, that will lead to reduced hiring for people to see those patients. This is an area that is about ready to "take off" as described in "When will data-powered personalized health hit ‘escape velocity’?" This is only one piece in a big puzzle that is going to dramatically disrupt health care. Given how much money goes into health care, and how big a problem that is for the government and every other segment of business, disrupting health care in a way that brings down costs has to be a net benefit, even if it includes putting a good fraction of the 2% of the labor force out of their current positions.

Right above RNs is food prep. It is a common joke to say that students who finish college with a degree in something that doesn't translate to a job will be asking, "Do you want fries with that?" On a more practical side, fast food employs a significant number of people and it often is a safe type of job position or a last resort for many people, including those without the skills to go on to other jobs. Don't expect that to be available in 5 years based on what you can read in "Hamburgers, Coffee, Guitars, and Cars: A Report from Lemnos Labs". The founder of Momentum Machines didn't go to the PR training school where they tell you that you never say your product is going to put people out of work, no matter how true that statement is. As a result, we get this great quote.
“Our device isn't meant to make employees more efficient,” said co-founder Alexandros Vardakostas. “It's meant to completely obviate them.”
(I discovered this article through Martin Ford's blog post, "Fast Food Robotics - An Update".)

Since I mentioned Amazon above, and because they are so disruptive for the current workforce, I will close out the 1-5 year future with more about what they are doing right now. They bought Kiva systems so that they can completely automate their warehouses. That is opening the door for them to take the huge step into giving customers instant gratification. In less than 5 years, Amazon will have a warehouse in the nearest major metro to your house, and they will use heavy automation to get your orders to you fast. Next day will be the slow option. That will be just one more reason that retail will be less needed, as will retail employees.

5-10 years
Moving out to the 5-10 year range, robots beyond Kiva systems are going to start making an impact. Janitors are smack in the middle of the top 15 list. They, and others doing similar jobs in human environments, have been safe from automation because the robots of the past has been fast and accurate in controlled environments. They don't play well with humans and they don't deal well with the unexpected situations that inevitably occur in environments that humans spend time in. Those limitations are going away.

If you don't believe me, go to YouTube and search for robots cooking or robots folding towels. A lot of what you will find is research work taking place with the PR2 robots from Willow Garage. PR2 is probably the most broadly used robot in this space, but there are quite a few others. What they all have in common is advanced vision and AI systems that allow them to handle the unexpected. They are also built to work well with humans, unlike the robots used in places like automotive plants which will do serious damage to any humans who accidentally get in the way of what the robots are doing.

I have to push this out to the 5-10 year range because right now it is a bit too expensive. No one is going to put a PR2 in their house at $400,000. However, the Baxter system, at $20,000, is an example of how companies are working to bring that down. (Note that the Baxter spokespeople have done "proper" training and they assure you in the article that no jobs will be lost to their robots. Their reasons have some merit, but that doesn't change the fact that in the longer run their robots will prevent humans from being hired to do things.) There are several efforts that are looking to get personal robotics off the ground and they have some serious money behind them.

Construction and manufacturing don't make the top 15 list, but they are definitely significant in the US economy. I actually expect that a lot of manufacturing will be re-shored and that construction should tick up as well. However, the manufacturing will be done without humans either by employing robots like Baxter or more advanced, articulate machines, or through additive manufacturing/3-D printing. That is another field that is on the verge of taking off with the output quality for devices that are in the $2000 range improving dramatically this year.

3-D printing is going to touch construction too. Want a new house? Instead of hiring people to build it, there are people who are working it make it so you can print your house.

10-15 years

Beyond 10 years things get harder to predict, but as all of these technologies mature, the ability for companies to do things without hiring humans is going to grow dramatically. There is one big technology that is slated to become widely available in about 8 years, that I fully expect to hit two more parts of the top 15 job list in just over 10 years: autonomous cars.

Hopefully everyone reading this knows about Google's autonomous cars, which have now driven over 300,000 miles. Both Nevada and California have passed laws to make it legal for these cars to operate when they become commercially available. Since all the major car makers are working on competing technology, it will become commercially available. GM has said autonomous driving will be standard equipment by 2020. I don't think it will be many years beyond that before the jobs that involve driving simply disappear.


What To Do?
So if you buy my arguments from above, the real unemployment level in the US is going up and there is nothing that politicians can really do to prevent it. So what should we do about this? First off, don't ignore it. That is what politicians are currently doing. It makes sense. After all, who is going to vote for the guy that says the jobs are gone, they aren't coming back and, by the way, more are going to be disappearing. No one wants to hear that, even if it is the truth. That's why it falls to people like me who aren't running for political office to say this.

The reality is that we shouldn't bury our heads in the sand though. We need to address this challenge and try to come up with ways that society can be organized where everyone can live a decent life even if large fractions of the population have no jobs because there is nothing productive for them to do in production of good. This is the search for a post-scarcity social organization. I don't claim to have a great answer to that, and even if I did, I wouldn't make this post longer by placing it here. However, I truly believe that the right way forward involves dramatic social changes and that the most important thing one can do to make that happen is to get people thinking about this.

So think about this some yourself, post comments to discuss with me and others, then share this with anyone you feel is willing to think about it. Oh yeah, then vote for some 3rd party candidate to protest the two big ones.  :)