The Automation Crisis At Last?

The Wall Street Journal reports that instead of rehiring, as was the pattern on emerging from past recessions, businesses are making capital investments in new machinery. Is the automation crisis predicted by Norbert Wiener back in the 1950’s finally upon us?

Comments:

  1. As an employer, if given the option of accomplishing a task or achieving a goal by hiring a person or purchasing some type of automation (even with a very high price tag on the automation), I'll absolutely go with the automation.

    It's not even so much a matter of "machines, computers, and robots don't take vacations or sick days, they don't form unions, they don't gossip, they don't use our IT to look at porn, they don't steal from us" etc. It's a matter of no one telling me what I can and can't ask when hiring (for example, I can't ask "are you married" or "do you have children" but I can ask "have you ever used a different name" or "is there anything preventing you from working overtime when required"), no one telling me that I can't use a criminal background check unless I can show that the specifics of the crime would directly affect the position available, no one telling me that no amount of proper documentation can prevent a bad employee (whom I was pressured to hire due to various regulations) from suing me if I terminate him or her, no one telling me that my payroll dept. has to send checks all over the country because I, not the employee, is responsible for sending child support and spousal support checks, etc., etc., etc., etc. Believe me, I could go on and on and on. Re-reading this, I suspect you do believe me 🙂

    Yes, I may be able to win the "wrongful termination" or "constructive termination" lawsuit but they and their contingency attorneys bank on (often correctly) the fact that my costs will not be compensated even when I prevail and so it's more economically effective to pay a "nuisance settlement." Not infrequently such a nuisance settlement has four or even five zeros before the decimal point.

    I understand that I'm morally and legally responsible to treat employees and potential employees fairly and I strongly believe that we do so. I understand that there's a price to pay for having the opportunity to make a profit by utilizing the skill sets of other human beings, but I don't see how any business owner could refrain from thinking "I wish I could operate without employees" and acting to do so where possible.

  2. Yes, this is clear. I don't mean this as a criticism of specific businesses acting rationally.

    But where does it leave us?

    I think it leaves us exactly where Wiener suggested, where most people don't have anything to sell that anybody wants to buy. So more wealth is created, but there is no mechanism for most people to get any of it.

    We increasingly get the capacity to build new Ferraris and lose the capacity to buy used Schwinns.

  3. But, as I've mentioned before, due to personal circumstances I know many, many people who are long-term unemployed (some having never worked) and living in what would charitably be described as a ghetto. Literally 100% of them have cars, flat panel televisions, computers, video gaming systems, the latest in clothes, etc. Not all of the cars are nice, not all of the apartments are nice, etc., but none are hungry, unable to get around, unable to entertain themselves and their many children, etc.

    So, while they aren't able (or, in many cases, interested in) getting a job that would allow them to buy a uaed Schwinn, through one way or another, they have all the modern conveniences and many of the luxuries. As you might imagine, many people in "my" circumstances are resentful, as are many people in "their" circumstances. So the question is: "how long can this continue?"

  4. Rob --- That is certainly not the experience of the under-employed poor here in eastern Washington state. Around here the food banks are vitally important as is Good Will for clothing, etc.

  5. Indeed automation is upon us.

    As a retired professor of computer science I believe I speak with some expertise on this subject. It has taken until around now to develop the right software, running on today's small and fast computers, to successfully operate the sensors and actuators, both of which are finally good enough only in this century.

    So the Midas Plague (but not Frederik Pohl's vision of it) is almost upon us. I view as a continued increase in dystopic stat4e, but then I'm certainly a 20th century person.

  6. bzzzt, Grypo, content free and rude. If you have something to say, say it.

    I happen to know that Rob does have the experience he describes. The set of people he refers to is nonempty.

    This does not mean that everybody without means has these coping skills. People who fall out of the middle class may not do as well. That's an answer. "You don;t know what you are talking about" is noise. I expect better from you. Fair warning - you could end up on the moderation list.

    This site will not be useful if it's just another place for people to confirm each others preconceptions. We have enough of those.

  7. It's true that I've broached the topic of replacing our unionized force of inspection personnel (one of our main lines of business is the placing of inspectors with appropriate experience and credentials on construction projects - typically commercial, governmental, or institutional) with some form of automation. The perceived advantages are huge in not having to rely on fallible humans with all of their faults. I speak from experience since my background is being one of those flawed human building inspectors.

    One would think, with a cursory evaluation, that the business I'm in would be difficult to automate. No two projects are identical, no two days are identical, many decisions must be made on the fly, etc. And yet I've started to consider not only the technical aspects of automating it but the bureaucratic ones as well (how would building officials, plan check departments, structural engineers, etc. be convinced that such a system succeeded in assuring that Building Code requirements are met?). Yet I think that we can incrementally implement it and believe it will give us a business advantage ("unique value proposition" in capital markets terminology). The process has started.

    I expect that many, if not most, manpower (personpower) dependent organizations are thinking similarly. It IS a frightening prospect. But I don't rule out the possibility that, when "things get bad enough" for the majority of people to be unable to be economically productive and buy the used Schwinn, a new paradigm must develop. All of us business owners (ha!) cannot get by on the basis of "I'll build you a 50,000 square foot mansion if you'll build me 100 foot yacht. The questions are what trauma must be endured to get there and what will the result look like?

  8. Ouch!!! It's Norbert Wiener. Like Wiener sausage. Repeat that 3x.(Yes, Norbert Wiener famously laid the mathematically rigorous foundations for constructing the http://en.wikipedia.org/wiki/Wiener_sausage )

  9. I'm highly suspicious of that graph. Annoyingly, I can't find data, but business surveys don't appear to be saying the same thing. Though the FT appears to find the opposite to both these sources in the figures. I can't find any decent comparison, but I'm wondering why recent massive job losses show up so weakly on that graph (compared to e.g. change in unemployment rate).

    And the WSJ is, of course, laying the blame on the pressure on poor American businesses from having to cover health and unemployment benefit tax costs. Uh huh.

    I could be wrong, but I'd be very surprised if the real difference between capital expenditure and hiring was as implied there. When things are uncertain, firms buy neither.

  10. Fixed, thanks. I try to remember that the name traces to Wien as in "Vienna", whose spelling is obvious to an English-speaker. But given how interested I am in Norbert, I forget an appalling number of times.

  11. "The set of people he refers to is nonempty."

    That's not really the point. The point is whether or not this is a really a group that justifies the resentment in the comment. It's certainly not a new idea, as these are Reagan's 'welfare queens'. Since then it's been a shown that the data justifies welfare economically, as the return on programs like food-stamps brings more to the economy through increased demand while adding little to the deficit. My terse response though is really more to do with Rob's initial comment in conjunction with his complaints about welfare queens. Perhaps his attitude toward people who work for a living is part of the problem. You'll notice him conveniently creating certain groups, that'll I'll conservatively tag as cynical, but's it's really, in my opinion, more or less, socially damaging. Of course, this attitude is pragmatic business, so it makes me wonder about the practicality of the pragmatic business approach in a social context.

    Back in the day, when the US was flush with new capital and surplus, before the credit revolution (that allows the working and non-working poor to buy flat screens and cars), the unions made deals that made sure the working class shared in the technological revolution (a commonly held belief on the true left is that technology is an innovation of the species and not property of the business class), that was sure to cost manufacturing jobs and give all the wealth created by technological innovation to those who own everything. This is how the middle was created. As stated, Rob sees unions as a problem, economically for himself and his business.

    As for structural problem in employment caused by technology, Weiner had company in his predictions. Howard Scott ideas, reproduced later by M King Hubbert (more commonly known for his peak oil theories, as well as other planetary boundaries) in study form,, predicted the same problem while forming the Technocratic Movement, early in the century. The radical ideas coming out of this were things like, ecologically safe energy (at the time the scientists had produced a system of hydro-power potential in the waters of N America that could satisfy energy needs in the 30's), and energy credits (accounting) that replace currency and the price system for purchasing.

  12. A smallish minority of people have been able to produce the essentials of life for everyone for some time now. The response has been to redefine essentials to include eg flat screen TVs, and to invent economic niches. The current change is that concentration of wealth is removing the niches devoted to serving the middle and lower classes, and introducing new ones tied more directly to the rich. This would have been familar to Adam Smith, in whose time significant numbers had the job of standing around making the rich look good.

    I suugest Rob read Barbara Ehrenreich's Nickeled and Dimed on the real experience of low wage jobs (which give a little MORE income than welfare) before he comments further.

  13. Hmm... I spent a few minutes on the BEA site and I couldn't find the correct data set for investment; I could get to historical investment figures, and current investment in equipment and software as percentage contribution to GDP change, but not the raw numbers.

    I'm not sure why you'd expect to see more change in the payroll numbers - the whole problem with this "recovery" is that job growth has been generally positive but very slow over the last two years (one or two hundred thousand jobs added every month in an economy with ~150 million total jobs.

    --Paul

  14. I'll concede that my phraseology has created a parallel with Reagan's "welfare queens" though I never considered that to be a generally valid concept any more so than the concept of "robber baron." For what it's worth, I was never a Reaganite. The people to whom I referred are my in-laws, their extended families, and their wider circle of friends. While that group probably numbers in the low 100s, they are representative of a significant population.

    In fact, paraphrasing what I said up thread, I agree that the social contract has been breached. Part of it is the seemingly inevitable march of automation and the economic and, especially, legal incentives to use it wherever possible and to seek the lowest cost alternative where it isn't. The other choice is to cease doing business. I'll continue to look for ways to reduce our exposure to the vagaries of human behavior and employment law. Ironically, in order to keep paying my employees (and yes, myself), I really have little choice

    It's also true that many newly unemployed probably don't have the skills and social framework that would enable them to survive and thrive in the absence of a job as those I described above have. Michael raised this point and I have to say that it's a valid one. So is the solution a sponsored class in "beyond the job - surviving and thriving without a regular income?"

    While I've blogged repeatedly about my embarrassment at being considered conservative when that means being categorized with those of the Limbaugh/Hannity/Perry/Bachmann/Palin/Inhofe/Fox News ilk, no one would accuse me of being on the left (though my partners sometimes wonder). I am unflinchingly a capitalist. Technology is an innovation of the people who invent it. If they sell it to a business, it is then the property of that business. Grypo, do you have anything that you would consider yours? If so, how would you differentiate such things from those things that aren't yours?

    While I have no magic bullet for any of our problems (however you characterize who "we" are), I'd support eliminating corporate personhood and a the implementation of a method of assessing businesses for the costs of externalities. The first is straightforward if not easy, the second - not so much of either. And neither stops the march of automation.

  15. Technology is an evolving resource that has grown since the beginnings of the species, slowly building on those generations before. It's benefits should be shared as such. Instead, we haggle over arbitrary patents enforced by a state mechanism to enrich the few. Therefore, it is in my opinion that technology should be handled as an open academic pursuit that benefits the species.

  16. Patent law is certainly a terrible mess but doing away with intellectual property would seem to remove incentives and get us back to a corrupt and lethargic Soviet-style state pretty quickly.

    I think utilitarian arguments alone suffice to require individual incentives, which in turn requires some differentiation as to power and status.

    The middle suffers from complexities that simple right or left centric arguments avoid, but in return it is actually workable.

  17. What I envision doesn't remove individual incentive, but it does change the incentive from money from business pursuits to money, position and prestige from the acedemic world. I understand the aversion to this idea, as it goes against knowm hemogeny.

    But to quickly counter your point, In my opinion the patent process is already corrupt, and not really that much different from past leftist bullshit in China and the USSR. It's just been written into law, much of it through international trade agreements that prevent local development of new technologies as neoliberal governments collude to allow industry to dominate the market. You can also see this in the medical field, where some countries (like US) protect the border from less expensive pharmacuticals. Also, patent laws are used to hide trade secrets, which is how energy companies are allowed to pump whatever they want into wasteewater wells.

    I'm not sure how to fix or tweak patent law to make technology more economical for the masses as will surely be needed going into a future where technology will likely be many people's last chance to escape the problems of environmental degradation and climate change. It should be scrapped.


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