All revolutions whether economic, political or social, cause fundamental dislocations to society & in the case of political revolutions, such as the Russian Revolution, or the French Revolution for that matter, major loss of life.
With the impending birth of the Fourth Industrial Revolution, the fate of the livelihoods of the bulk of the world’s population is in jeopardy.
What does this imply for humankind? No work and hence no income in a sea of abundance or will this be ameliorated by the awarding of a Universal Basic Grant to all inhabitants on the earth?
Let us open the Pandora’s Box.
Main picture: A tiger shaking itself vigorously
The Fourth Industrial Revolution
In time to come, it will be recognised that most jobs since the dawn of time never engaged all of the workers’ mental faculties. Admittedly, the advent of Industrialisation has removed the manual component to a large extent. Forklifts, trucks and cranes have replaced manual lifting, moving and loading. Image a building site two centuries ago. The foundations would have been manually dug, the building materials would have been manually carried to the third floor and so on. Instead of motor power, it would have been muscle power or manpower.
So much for manual work, but what about engaging the brain? In the main the engagement of the brain in most jobs has risen but in the majority of cases such as cashiers, machinery operators, factory floor workers, waiters and an array of other low level jobs, the level of training required is minimal. In fact, the rudiments of the job can be grasped within less than a day. Plainly but pejoratively put, these workers’ brains are not engaged for most of their working day.
The cycle of the job might be hours such as that of a delivery vehicle driver but most of these low-level jobs are highly repetitive with cycle times in the minutes.
Gone are the days when machines lacked senses. Minutarisation has made them cheap & ubiquitous. Many of the factory jobs in companies at which I worked over the past 40 years only required a human due to the machine’s lack of sensors. The identification of defective biscuits at Pyotts, the jigging of steel to beams at Monoweld Galvanisers or the forklift not been aware of the exact height of a trailer at Robor, were major impediments to automation.
If self-driving vehicles can be fully operational & street legal by 2025, the aforementioned tasks would be proverbial child’s play using less sophisticated senses.
Where does this leave these workers?
According to the Neo-Luddites: workless.
Lest anyone slits their wrists in despair, let me make my viewpoint abundantly clear. As Ivo Vegter states “This is a misconception that dates back to the dawn of the industrial age, when weavers led by Ned Ludd feared factory automation would put them out of work. The Luddites proceeded to destroy modern looms in protest. Yet despite the temporary disruption in the labour market that textile automation caused, both the rich and the poor today enjoy cheaper access to better clothes than ever before, and nobody mourns the bygone age in which all cloth had to be woven by hand.”
Similarly, automation in the form of motorised vehicles has put industries related to horses such as stabling, farriering, operating wayside inns, and carriage makers out of business & redundant.
One can continue. Washing machines put washerwomen out of work, refrigeration and freezers destroyed the natural ice transport business, computers eliminated the jobs of vast numbers of clerks and typists.
In hindsight, who would prefer to spend their entire Monday washing clothes by hand, who would not prefer a cornucopia of food from across the globe during all seasons and finally, who but very few office workers, would want a return to the desk jobs of the 1950s?
Certainly not me and certainly no Trade Union today would support the banning of washing machines and computers or the destruction of industrial machines like Ned Ludd and his cohorts.
Economic progress is the story of specialisation, innovation, and the ever more efficient division of labour. Reducing the need for labour that can be automated, means that we can devote humanity’s abilities to more productive work. Temporary dislocations in the job market are inevitable, but they are not to be feared in the greater scheme of things. On the contrary, they are essential to fuel rising prosperity for all.
If that account is to be believed, then humankind has nothing to fear from rising automation. What these accounts do not relate are the hardships endured during the “interregnum” as society adapts to the new technology. The speed of a new technology’s introduction versus society’s adaptive ability strains societal bonds resulting in outbreaks of neo-Luddism. Ultimately futile, change is ineluctable and inexorable.
Central to the apprehension about the so-called Fourth Industrial Revolution is that whole industries will become workerless, that somehow the currently affected industries are somehow different from the automation of agriculture where the number of workers declined by 98% yet output increased.
I contend that the ultimate problem is not the scything of farm workers or the slashing of steel workers, but humankind’s lack of imagination about the replacement industries.
In his seminal book, The Future of Work, Jeremy Rifkind postulated some twenty years ago that the future of work lay in those types of work not susceptible to automation. Among the incipient industries would be the personal assistant in all its forms, a prime example would be in the medical industry.
I can identify with that assumption. In time to come the explosion of advances in medical science will enable the impossible such as the regrowing of limbs and other body parts, biological changes such as the improvement of one’s musical ability through gene therapy and the curing of all diseases including cancer amongst a myriad of other breakthroughs.
Universal Basic Income
People are validly concerned about how AI and robotics are taking jobs and destroying livelihoods thereby reducing our earning capacity, and subsequently destroying the economy.
In anticipation, countries like Canada, India and Finland are running experiments to pilot the idea of “Universal Basic Income” – the unconditional provision of a regular sum of money from the government to support livelihood independent of employment.
For some perspective, Thomas Paine outlined a plan in his 1797 essay “Agrarian Justice” to create a national fund making payments of 15 pounds sterling to each adult over 21 years old….
Today, experiments with UBI are spreading across the world, from Finland and the Netherlands to Canada and France.
Of these, the one which I personally support is the Dutch experiment which will operate as follows:
The local government in the Dutch city of Utrecht is planning to conduct an experiment that would give a guaranteed monthly income to 250 Dutch citizens currently receiving government benefits. A two-year test period is tentatively set to begin in January of next year, and some citizens of Utrecht and some nearby cities will receive a flat sum of €960 per month (about $1,100). The Utrecht proposal — called “Weten Wat Werkt,” or “Know What Works” — includes six test groups, and the members in each will receive slightly different stipends under slightly different conditions. In addition to the group that will receive €960 per month without any work obligations, there is a group that will be given that, plus an additional €150 at the end of the month if they provide volunteer services, such as doing maintenance work on schoolyards.
In this case, the recipients are divided into two groups – one not working whereas the other has to perform some civic duty. In the cases of Finland and India, the stipends were paid without any work obligation; the only variable being the quantum of the payment.
To a large measure, UBI in its bland version, is no different from that of some form of Social Security Payment which is already ubiquitous across the globe. Like SCP’s the intractable problem is funding.
Demonetised Cost of Living
In recent months, the world has experienced a wave of “black swan” events such as Brexit and the election of Trump as American President. Essentially, in both cases the wellspring of discontent is the same: static or declining income levels amongst the average worker combined with surging executive remuneration.
This vitriol of frustration spewed onto these elections.
Whilst acknowledging this factual situation, just as crucially there has been a conundrum, which raised its unwanted head. This had been the issue of plummeting technology prices. This has manifested itself not only in price reductions but vast improvements in performance for the same price. In addition, new services such as GPS have simplified and improved life beyond recognition.
Yet in most instances, these improvements are not reflected in any statistic. Rather one’s level of wellbeing is deduced from one’s income level. Without a more accurate measure of well-being, this yardstick will have to be taken at face value.
Recently the book Abundance: The Future Is Better Than You Think by by Peter H. Diamandis and Steven Kotler has addressed by conundrum – partially at least – regarding what he terms the demonetising the cost of living.
In this book, the authors do a sterling job of addressing the reduction in the costs of critical components of one’s life style. In many cases, there is rampant cost deflation or alternatively certain services are now virtually cost free.
An illustrative example that they use in their book, is that of the services provided by one’s cellphone usually at no or minimal additional cost. Most of these applications were unthinkable even ten years ago yet now they are available gratis. An App such as Waze is capable of not only performing the usual GPS functions but it is also able to calculate the best route based upon all the traffic information automatically provided by all the other Waze users.
Extending the principle, Applications will soon be able to notify one what the queue length is per shop at one’s mall. Further enhancements will enable one to trace an item in the store to its shelf.
None of these time saving options, operating autonomously, are included in any “feel good” factor.
Firstly, what Diamantis and Kotler did was to analyse spending habits around the world. The objective was to determine what proportion of one’s income was spent per category. By applying the estimated deflationary impact upon each class, they were able to make conjectures about the net monetary impact upon a person.
For this exercise, they commenced with three huge economies: The United States, China, and India.
In the U.S.A for 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.
In other words, more than 75% of Americans’ expenditures come from Housing, Transportation, Food, Personal Insurance, and Health.
In China, per a recent Goldman Sachs Investment Research report, there is a similar breakdown — Food, Home, Mobility, and Well-Being make up the majority of the expenditures.Interestingly, in China, consumers care significantly more about looking good and eating better (and less about having more fun) than in the U.S. – nearly half of consumer income goes to clothes and food.
In India, with a population of 1.2 billion people, expenditures on Food, Transportation, and Miscellaneous Goods and Services are most prominent. Rent/Housing and Healthcare represent a smaller portion of expenditures. These differences likely represent cultural differences in each of the three very different countries – but overall, the majority of expenditures are in these top 7 categories:
Services such car hire, taxis and chauffeured cars have always been available. The problem has always been cost. Uber revolutionised the costs by eliminating all the admin costs by using their App and devolving all the other costs such as fuel, parking, repairs and insurance onto the driver or vehicle owner which is not Uber.
A calculation performed in the past performed on behalf of MyBroadband, reveals that in many cases it is much cheaper to use a car as a “service”. In our household, both Alesha’s, and most definitely Janine’s cars, should be sold to be supplanted with Uber.
In Abundance, Diamantis and Kotler records that the cost of food in the USA has dropped thirteenfold over the past century. That reduction will continue. Additional gains will be made as they learn to efficiently produce foods locally through vertical farming (note that 70% of food’s final retail price comes from transportation, storage and handling). Genetic and biological advances allow increases in yield per square meter to be achieved.
Healthcare can be split roughly into four major categories: diagnostics, intervention/surgery, chronic care and finally medicines.
- Diagnostics: AI has already demonstrated the ability to diagnose cancer patients better than the best doctors, image and diagnose pathology, look at genomics data and draw conclusions, and/or sort through gigabytes of phenotypic data… all for the cost of electricity.
- Intervention/Surgery: In the near future, the best surgeons in the world will be robots, and they will be able to move with precision and image a surgical field in high magnification. Each robotic surgeon can call upon the data from millions of previous robotic surgeries, outperforming the most experienced human counterpart. Again, the cost will asymptotically approach zero.
- Chronic/Eldercare: Taking care of the aging of chronically ill will again be done most efficiently through Robots.
(iv) Medicines: Medicines will be discovered and manufactured more efficiently by AI’s, and perhaps in the near future, be compounded at home with the aid of a 3D printing machine that assembles your perfect medicines based on the needs and blood chemistries in that very moment.It should also be noted that the price of genomics sequencing is plummeting. Accurate sequencing should allow us to predict which diseases that you would most likely to develop, and which drugs are of highest use to treat you.
Two factors will impact greatly upon costs: technology & 3D printing.
A major factor in construction costs relates to the “one-off” production costs. The lever that has reduced manufacturing costs had been automation. Most of these techniques cannot be applied to the construction of buildings. As far as 3D printing is concerned, it effectively eliminates that constraint allowing architects to let their imaginations run riot. Instead of minimalist building designs, more ornate structures would now be possible once again.
Another factor influencing house prices is their location. People flock to high-density, desired areas, near the jobs and the entertainment. This market demand drives up the price. The link between location of residence and one’s work place be broken by three factors: computerised processes, virtual reality and autonomously driven vehicles thus enabling employees to disconnect from a physical work location.
Energy is ubiquitous. Five thousand times more energy hits the surface of the Earth from the Sun in an hour than all of humanity uses in a year. Solar is abundant worldwide. Better yet, the poorest countries on Earth are the sunniest. Today, the cost of Solar has dropped to ~$0.03 kWh. The cost of Solar will continue to demonetize through further material science advances that increase efficiencies.
The current business model will be overturned. Instead of huge discrete power plants, power generation will be totally localised. Recent innovations such as Tesla’s photovoltaic roof tiles are leading the way to the future.
This aspect is particularly pertinent in South Africa, given the recent Fees must Fall campaign. Instead of vast concrete edifices, tuition costs will be slashed as the bedroom becomes one’s lecture hall. World class lecturers from world class overseas universities would be available.
The bane of South African school education is mathematics teachers. Lectures in a classroom setting using AV would ensure that all South African learners are afforded the opportunity of obtaining world class instruction.
Entertainment (video and gaming) historically required significant purchases of equipment and services. With the advent of music streaming services, YouTube, Netflix and the iPhone App Store, there has been an explosion of available selections at the same time that the universe of options rapidly demonetizes.
YouTube has over a billion users — almost one-third of all people on the Internet — and every day, people watch hundreds of millions of hours on YouTube and generate billions of views.
Extremely turbulent economic times lie ahead. Populist rhetoric must temporally sway some or even a majority of voters, yet the answer does not lie in revolts and revolutions. This is the path to unnecessary pain.
Retraining workers to accept and adopt these new technologies is humankind’s sole solution. With the costs of UBI being prohibitive, that option is unlikely to be a solution. If it is embraced in any form, it should never not encompass the quid pro quo of some civic duty.
Article by Ivo Vegter entitled “Stephen Hawking demonstrates elitist neuroses and condescension”
The Future of Work by Jeremy Rifkind