The Robots Are Coming!

by Andres Oppenheimer

  The same thing occurred in the mid-twentieth century, when Henry Ford began mass-producing cars, and people who operated horse-drawn carriages protested out of fear that these new rolling machines would leave them jobless. And indeed, the automobile industry left many carriage drivers, stable masters, and blacksmiths without work. But not many people at the time anticipated that the advent of the car would generate millions of new jobs in auto factories, gas stations, and mechanics shops, and in the building and maintenance of asphalt roads. Today, there are millions more people working in the automotive industry than there were driving horse-drawn carriages more than a century ago. The big question is whether that will continue to be the case in the future. With growing numbers of us using private taxi services like Uber, or if autonomous cabs become more economically viable and convenient than having our own car, we will have to see what happens to the number of car industry workers.

  ATMS DIDN’T MAKE BANK TELLERS GO EXTINCT

  The classic example put forth by techno-optimists is that of ATMs. In the 1980s, when ATMs began to proliferate across the country, a panic broke out among bank employees. Many predicted that these new machines would soon put an end to the jobs of traditional bank tellers. But what actually happened was that ATMs allowed for human employees to take on more sophisticated tasks such as offering loans, mortgages, and other customer service duties. This allowed banks to expand their business, open more branches, and employ more people.

  While in 1985 there were 60,000 ATMs and 485,000 customer service bank employees in the United States, by 2002 the number of ATMs had grown to 352,000 and the number of bank jobs had risen to 527,000 employees. And, techno-optimists note, this figure doesn’t include the thousands more who work to maintain and repair the ATMs themselves.

  “Why didn’t employment fall?” asks James Bessen, the author of one of the best-known studies on the effects of ATMs. “Because the ATM allowed banks to operate branch offices at lower cost. This prompted them to open many more branches, offsetting the erstwhile loss in teller jobs. At the same time, teller skills changed. Non-routine marketing and interpersonal skills became more valuable, while routine cash handling became less important. That is, although bank tellers performed relatively fewer routine tasks, their employment increased.”

  Bessen cited several other recent examples in which automation has not reduced employment. In supermarkets, “barcode scanners reduced cashier’s checkout times by 18–19%, but the number of cashiers has grown since scanners were widely deployed during the 1980s,” and “e-commerce has also grown rapidly since the late 1990s, now accounting for over 7% of retail sales, but the total number of people working in sales occupations has grown since 2000,” Bessen argues. Still, though, as we have previously noted, the expansion of banks is coming to an end, and many financial institutions are beginning to close subsidiaries that aren’t able to compete successfully with virtual banks and online platforms.

  Another example Bessen cites has to do with automated answering services like voicemail, which, he argues, haven’t wiped out the jobs of telephone operators but rather have changed what they do. Today, he argues, receptionists perform a number of different tasks, and many of them have become all-purpose receptionists. While the number of telephone operators has fallen dramatically, from 317,000 in 1980 to 57,000 today, the number of receptionists has grown from 438,000 to 1,035,000. There are still receptionists who answer the phone and take messages, but they’re also doing many other things. So far the net balance between these jobs and technological advances has been positive, both in the quality and quantity of work, Bessen says in his study. Again, the big question is what will happen in the future when robotic receptionists become popular.

  AMAZON BUYS MORE ROBOTS AND HIRES MORE PEOPLE

  The most recent case of job creation resulting from technological disruption is that of Amazon, techno-optimists say. In 2016, Amazon increased its number of transport and cargo robots by 50 percent—from 30,000 to 45,000—in order to streamline its operations. When news of this broke, there was speculation that the automation of Amazon warehouses would result in the loss of 15,000 jobs. However, it had the opposite effect. Amazon hired 50 percent more people during that same time frame and announced in its 2016 fourth-quarter report that it planned to add 100,000 new jobs in the next eighteen months.

  Amazon explained that thanks to the robots—which are much more efficient than humans when it comes to loading and unloading distribution trucks—the company managed to significantly reduce its storage and transportation costs. That, in turn, allowed the company to reduce prices, which led more customers to buy products via Amazon, producing a greater demand, which forced the firm to hire more sales and distribution employees. Before, Amazon workers had to roam from one end of a massive warehouse to the other, looking for product locations and climbing mobile staircases to load or unload packages, all of which took a good deal of time. When the website SingularityHub reported on this case, it titled the article—perhaps with a bit of exaggerated optimism—“How Robots Helped Create 100,000 Jobs at Amazon.”

  ACCORDING TO THE TECHNO-OPTIMISTS, THE KEY LIES IN INDIRECT JOBS

  Techno-optimists argue that comparisons between the 758,000 employees AT&T had a few decades ago and the current 55,000 employed by Google or the 76,000 at Apple are misleading. They argue that such a strict, focused comparison doesn’t take into account the huge number of jobs indirectly created by Google, Apple, and other technology firms. Since the release of its iPhone in 2007, Apple has built a platform where entrepreneurs from around the world have created hundreds of thousands of applications, generating jobs for 1.9 million people in the United States alone, according to figures from Apple’s website. So, the optimists suggest, a more accurate employment figure for Apple would be 1.9 million, not the 76,000.

  New technologies increase employment in three ways, according to a study by economists Michael Mandel and Bret Swanson commissioned by the Technology CEO Council. First, they generate direct jobs for the workers who manufacture their products; second, they generate indirect jobs by creating a favorable atmosphere for platforms such as the iPhone, which allow millions of entrepreneurs to invent applications that in turn become new companies themselves; and third, they increase productivity, which makes costs lower and frees up capital so that companies and consumers can invest in other things.

  “There is good news,” the study says. “With the arrival of powerful new technologies, we stand on the verge of a productivity boom. Just as networking computers accelerated productivity and growth in the 1990s, innovations in mobility, sensors, analytics, and artificial intelligence promise to quicken the pace of growth and create myriad new opportunities for innovators, entrepreneurs, and consumers.”

  SWANSON: “THERE WILL BE A BOOM IN EMPLOYMENT, NOT UNEMPLOYMENT”

  Mandel and Swanson predict that over the coming years, millions of jobs will be created in the manufacturing sector. According to them, this sector has grown very little in recent years because the vast majority of technological investments have taken place in digital industries, which account for barely 25 percent of private-sector employment. There have been relatively few technological investments in factories or in the construction or transportation industries, which account for roughly 70 percent of private-sector employment. According to Mandel and Swanson, the next stage of the information revolution will be new Internet platforms that will allow entrepreneurs to create new companies in manufacturing, transportation, education, and agriculture, among a number of other industries.

  When I asked Swanson to give me an example of how jobs might be generated in the manufacturing sector, he told me that 3-D printers and virtual reality headsets will create millions of new jobs. Just as the 2007 emergence of the iPhone opened the door for millions of people who weren’t computer programmers to use computer programs, the same thing will happen with 3-D printers, he said. We’ll have 3-D p
rinters in our homes, and with them we will be able to make products for ourselves and for selling to others. There will be a boom in employment, not unemployment, he said.

  “With a 3-D printer in our house, we could start a new business, we could make clothing or sporting equipment with built-in sensors, smart furniture, parts for drones…the possibilities are endless,” Swanson told me. “Steve Jobs and the other inventors of the iPhone had no idea of the millions of applications that were made possible by the smartphone. The fascinating thing about these platforms is that they release an amazing wealth of creativity.”

  “WE’LL BE GARDENERS ON MARS”

  One of the most optimistic futurologists I have ever met—so optimistic, in fact, that he founded a company to freeze the brains of dead people in the hopes that, by 2045, scientists will have discovered how to revive them—is José Luis Cordeiro, a Venezuelan researcher affiliated with Singularity University in Silicon Valley, a mecca for techno-optimists from around the world. Like Swanson, Cordeiro is not worried about the possibility of a jobless world.

  Over breakfast in Buenos Aires, where we were invited speakers at a conference on innovation, Cordeiro told me that it’s impossible to know how technologies will evolve, and that therefore—as was the case with the thousands of apps that emerged from the iPhone—there is no real way to predict what jobs might arise from them.

  Not convinced by his argument, I asked him, “So what do you think most of us will be doing in a decade or two? What will the journalists, professors, office workers, lawyers, doctors, and manufacturing workers be doing once the robots have taken our jobs?” Cordeiro gave me the boldest—and wittiest—answer I received out of all the interviews I conducted for this book. “I don’t know, maybe we’ll be gardeners on Mars,” he said with a shrug and a smile.

  ANOTHER REASON FOR OPTIMISM: EVERYTHING WILL BE CHEAPER

  If there were a pope of techno-optimism, it would probably be Peter Diamandis, the cofounder of Singularity University and the author of the book Abundance: The Future Is Better Than You Think. In it, he and his coauthor, Steven Kotler, predict that we will be shifting from a world of scarcity to one of abundance in which there will be more resources and greater prosperity. Thanks to advances in technology, mankind will be able to overcome its biggest current problems, including shortages of oil and drinking water, as well as manufacture cheaper products, making them available to growing numbers of people. As they write:

  Today 99 percent of Americans living below the poverty line have electricity, water, flushing toilets, and a refrigerator; 95 percent have a television; 88 percent have a telephone; 71 percent have a car; and 70 percent even have air-conditioning. This may not seem like much, but one hundred years ago men like Henry Ford and Cornelius Vanderbilt were among the richest on the planet, but they enjoyed few of these luxuries.

  Diamandis, who earned a medical degree from Harvard and studied molecular genetics and aerospace engineering at MIT, said in the book that he isn’t terribly concerned about technological unemployment because the world economy continues to grow, and he expects the cost of living for everyone to fall dramatically in the next twenty years. “People are concerned about how AI and robotics are taking jobs, destroying livelihoods, reducing our earning capacity, and subsequently destroying the economy,” he wrote in a blog post for SingularityHub. “But what people aren’t talking about, and what’s getting my attention, is a forthcoming rapid demonetization of the cost of living. Meaning—it’s getting cheaper and cheaper to meet our basic needs.”

  HOUSING, TRANSPORTATION, AND FOOD WILL ALL BE CHEAPER

  For much of human history, a person’s entire income went to paying for shelter, food, and clothing. But now, thanks to advances in technology, the costs of transportation, food, medicine, clothing, and education have fallen significantly, and Diamandis expects them to fall even further. “In the U.S., in 2011, 33% of the average American’s income was spent on housing, followed by 16% spent on transportation, 12% spent on food, 6% on healthcare, and 5% on entertainment,” he writes. “In other words, almost 75% of Americans’ expenditures come from housing, transportation, food, personal insurance, health, and entertainment.” The figures are similar in other countries, like China. Thanks to new technologies, there is something of a worldwide “technological socialism” on the horizon, in which “the costs of housing, transportation, food, health care, entertainment, clothing, education, and so on will fall, eventually approaching, believe it or not, zero,” Diamandis says.

  Furthermore, Diamandis points out that “twenty years ago, most well-off U.S. citizens owned a camera, a video camera, a CD player, a stereo, a video game console, a cellphone, a watch, an alarm clock, a set of encyclopedias, a world atlas, a Thomas guide, and a whole bunch of other assets that easily add up to more than $900,000. Today, all of these things are free on your smart phone.”

  And this trend will only accelerate as we move into the future. Recalling Martin Ford’s argument that the cost of housing will continue to rise because of the limited amount of space in cities, Diamandis argues that one of the main reasons for this—“location, location, location,” or the advantages of living close to work—will disappear in coming years, thanks to self-driven cars and the ability to work remotely through virtual reality or the Internet.

  “Think about what drives high housing costs,” Diamandis writes. “Why does a single-family apartment in Manhattan cost $10 million, while the same square footage on the outskirts of St. Louis can be purchased for $100,000?” The answer is quite simple: their respective locations. People are willing to pay much more for the privilege of being close to their jobs and not having to deal with traffic jams. But all that will change when autonomous cars are ready to drop us off and pick us up from work. If you can spend your commute either working, reading, sleeping, or watching a movie, what does it matter if it takes an hour and a half? Diamandis predicts that more and more people will be moving out of the cities and into the suburbs, and that housing prices will fall. In addition to that, virtual reality will make the location of your home even more irrelevant, he adds. If you can interact with your coworkers through a virtual reality headset, why not work from home? And finally, building costs will be driven down thanks to 3-D printers and robots, which will be doing more and more of the actual work of construction.

  When it comes to transportation, which is just behind housing in terms of what we spend the most amount of our money on, costs are already being reduced by Uber, Lyft, and other applications that offer private, low-cost taxi services. And the cost of transportation will fall even further when these services start using autonomous cars. “When Uber rolls out fully autonomous services, your cost of transportation will plummet,” Diamandis writes. “Think about all of the related costs that disappear: auto insurance, auto repairs, parking, fuel, parking tickets. Your overall cost of ‘getting around’ will be 5 to 10 times cheaper when compared to owning a car.”

  With food, the cost as a percentage of our income has already plummeted in the past century thanks to the green revolution, and it will continue to decrease thanks to advances in genetics, biology, and vertical agriculture. Today, 70 percent of what we pay for food comes from transportation, storage, and packaging. But, according to Diamandis, when transportation is handled by autonomous trucks—which could begin happening as early as in the next five years—and the storage and packaging is handled by robots—which is already happening in some supermarkets—the price of food will fall even more rapidly. It is true that intelligent machines will eliminate many jobs, but techno-pessimists forget to acknowledge that everything will be cheaper, and that many more new jobs will be created, Diamandis said.

  ONE THING SEEMS CERTAIN: THERE WILL BE MORE INEQUALITY

  Regardless of whether new technologies will create more jobs or not, we are likely to see greater social inequality, because people with higher levels of education will be better prepared
to adapt to technological change and to work in the jobs of the future. Robots will replace more manufacturing workers than nuclear physicists, because the latter perform less automatable work and are better equipped to take on new responsibilities. It will be hard for someone who never finished high school and works at a factory to reinvent himself as a data analyst, while an engineer or physicist won’t have much trouble making the transition to another job that requires creativity and abstract reasoning.

  As robots and other intelligent machines replace more manual workers, salespersons, receptionists, and administrative assistants performing routine tasks, there will be a widening social gap between people with higher education degrees and those who never finished high school. Education is, and will increasingly be, the secret to survival and success in the labor market. Society will be divided into three general groups. The first will be members of the elites, who will be able to adapt to the ever-changing technological landscape and who will earn the most money, followed by a second group made up primarily of those who provide personalized services to the elite, including personal trainers, Zumba class instructors, meditation gurus, piano teachers, and personal chefs, and finally a third group of those who will be mostly unemployed and may be receiving a universal basic income as compensation for being the victims of technological unemployment. Historian and futurist Yuval Noah Harari has referred to this third category as “the useless class.”