Robots – screwing US

Robots to replace almost half of jobs over next 20 years: expert

Forty-seven per cent of jobs in the US will be overtaken by computers in the next decade or two, according to research. Photo: Generic Thinkstock

History is full of examples of machines replacing workers.

At the start of the 20th century about 40 per cent of US workers were in agriculture. That’s now about two per cent but the unemployment rate has remained relatively steady.

The invention of the car savaged jobs in the horse transport industry but gave rise to tourism and all the jobs that come with it.

In the early 19th century the Luddites rioted against labour-replacing machinery in the English textile industry, coining a name for someone resistant to change.

“These people weren’t irrational. There were genuine risks to their jobs,” Professor Osborne said.

“And while overall in the end unemployment wasn’t affected, there certainly were very severe negative consequences for those workers in the short term.

“I think the story here is fairly similar actually that in the end, yes we may see new forms of work generated but it’s not clear that the kind of people who are put out of work, which I said ought to be those at the low-skilled end of the spectrum, are necessarily going to be those that move into those new forms of work.

Johann Rupert, the South African who has made billions peddling Cartier jewelry and Chloe fashion, said tension between the rich and poor is set to escalate as robots and artificial intelligence fuel mass unemployment.

“We cannot have 0.1 percent of 0.1 percent taking all the spoils,” said Rupert, who has a fortune worth $7.5 billion, according to data compiled by Bloomberg. “It’s unfair and it is not sustainable.”

China’s Troubling Robot Revolution

OVER the last decade, China has become, in the eyes of much of the world, a job-eating monster, consuming entire industries with its seemingly limitless supply of low-wage workers. But the reality is that China is now shifting its appetite to robots, a transition that will have significant consequences for China’s economy — and the world’s.

In 2014, Chinese factories accounted for about a quarter of the global ranks of industrial robots — a 54 percent increase over 2013. According to the International Federation of Robotics, it will have more installed manufacturing robots than any other country by 2017.

Midea, a leading manufacturer of home appliances in the heavily industrialized province of Guangdong, plans to replace 6,000 workers in its residential air-conditioning division, about a fifth of the work force, with automation by the end of the year. Foxconn, which makes consumer electronics for Apple and other companies, plans to automate about 70 percent of factory work within three years, and already has a fully robotic factory in Chengdu.

Chinese factory jobs may thus be poised to evaporate at an even faster pace than has been the case in the United States and other developed countries. That may make it significantly more difficult for China to address one of its paramount economic challenges: the need to rebalance its economy so that domestic consumption plays a far more significant role than is currently the case.

China’s economic growth has been driven not just by manufacturing exports, but also by fixed investment in things like housing, factories and infrastructure — in fact, in recent years investment has made up nearly half of its gross domestic product. Meanwhile, domestic consumer spending represents only about a third of the economic pie, or roughly half the level in the United States.

This is clearly unsustainable. After all, there eventually has to be a return on all those investments. Factories have to produce goods that are profitably sold. Homes have to be occupied, and rent has to be paid. Generating those returns will require Chinese households to step up and play a larger role: They will have to spend far more, not just on the goods produced in China’s factories, but increasingly in the service sector.

Making that happen will be an extraordinary challenge. Indeed, the Chinese leadership has been talking about it for years, but virtually no progress has been made. One problem is that even in the wake of recent wage increases, average Chinese households simply have too little income relative to the size of the economy.

Another problem is that the Chinese public has an extraordinary propensity to save. By some estimates, the average household socks away as much as 40 percent of its income. That may be partly driven by the need to provide for retirement and self-insure against risks like unemployment and illness, as China’s newly capitalistic economy has largely decimated the social safety net.

The bottom line is that any policy designed to rebalance economic growth will have to raise household incomes while dampening down the saving rate. That would be a daunting challenge under any circumstances, but accelerating technology is virtually certain to make it far more difficult.

The traditional path followed by developed countries has been to first raise incomes and build a solid middle class on the basis of manufacturing, and then later to make the transition to a service economy. The United States, and later, countries like Japan and South Korea, had the luxury of undertaking that journey at a time when technology was far less advanced. China is faced with making a similar transition in the robotic age.

Automation has already had a substantial impact on Chinese factory employment: Between 1995 and 2002 about 16 million factory jobs disappeared, roughly 15 percent of total Chinese manufacturing employment. This trend is poised to accelerate.

That might not be a problem if the Chinese economy were generating plenty of higher-skill jobs for more educated workers. The solution, then, would simply be to offer more training and education to displaced blue-collar workers.

The reality, however, is that China has struggled to create enough white-collar jobs for its soaring population of college graduates. In mid-2013, the Chinese government revealed that only about half of the country’s current crop of college graduates had been able to find jobs, while more than 20 percent of the previous year’s graduates remained unemployed.

According to one analysis, fully 43 percent of Chinese workers already consider themselves to be overeducated for their current positions. As software automation and artificial intelligence increasingly affect knowledge-based occupations, especially at the entry level, it may well become even more difficult for the Chinese economy to absorb workers who seek to climb the skills ladder.

What policies might help China succeed in making the transition to a consumer economy even as the robotic revolution unfolds? Strengthening the health care, retirement and unemployment insurance systems, so that workers feel more secure, might help lower the savings rate somewhat.

However, it seems likely that the Chinese government will ultimately need to resort to direct income supplementation in some form — perhaps through a program similar to the earned-income tax credit in the United States. Even that may prove ineffective in the long run as rapidly advancing technology leaves more and more workers behind.

China could well turn out to be ground zero for the economic and social disruption brought on by the rise of the robots. The country’s relatively brittle authoritarian political system, together with its dependence on a sustained level of economic growth that would be considered extraordinary in any developed nation, suggest that China may face a staggering challenge as it attempts to adapt to the realities of a new age.

“Activism has caused companies to cut R.& D., capital investment and, most significantly, employment,” he said. “It forces companies to lay off employees to meet quarterly earnings.”

“It is,” he concluded [Martin Lipton, the corporate lawyer], “a disaster for the country.”

March 29, 2015 5:55 pm
The great American disconnect

Edward Luce

In Silicon Valley, ‘fail harder’ is a motto. In Washington a single miscue can ruin your career

If you believe history is yet to come, the United States is still the place to be. Only in America can you find people trying to make cars fly, abolish human mortality and nurture robots with feelings. Yet America’s politics is remarkable for its resistance to new ideas. The gap between Washington’s dearth of creativity and the ferment beyond is widening. Every week, some audacious start-up aims to exploit the commercial potential of science. Many are too zany to succeed. A few will deserve to. Every week, it seems, a presidential campaign is launched. Some of the 2016 candidates are actively hostile to science. None, so far, have hinted at original ideas for fixing America’s problems. One will undeservedly succeed.

The root of America’s intellectual disconnect is cultural. In Silicon Valley, “fail harder” is a motto. A history of bankruptcy is proof of business credentials. In Washington, a single miscue can ruin your career. Ruth Porat’s move last week from Morgan Stanley, where she was chief financial officer, to Google for a cool $70m was taken as another sign of Silicon Valley’s increasing edge over Wall Street. A growing share of top US graduates are bypassing a career in investment banking for Big Data. Less noticed was the fact that Ms Porat turned down a job in Barack Obama’s administration last year as deputy Treasury secretary. She feared the Senate confirmation process would rip her to shreds. She was probably right.

The result is a system in which the bland are leading the bland. Washington is host to the largest collection of think- tanks in the world. Yet they are notable nowadays for their lack of original thinking. The ideas shortage has nothing to do with low IQ. The post codes around Washington have America’s highest concentration of PhDs other than Silicon Valley. But if you want a job in a future US administration, you risk running a gauntlet from which you may never recover. The route to success is paved with caution. One stray remark, or risqué policy idea, can kill your prospects. Science is the basis of America’s innovative edge. Yet embracing it can be a political career-stopper. Several Republican presidential candidates reject the notion of man-made global warming while some believe child vaccines cause disease.

Aversion to science is not a conservative monopoly. Among the 19,000 papers produced by Washington’s top 10 think-tanks in the past few years, science and technology ranked bottom among the subjects addressed, according to a survey by Foreign Policy magazine. During the cold war, senior US officials were expected to be fluent in the language of nuclear technology — understanding it was the basis of America’s rivalry with the Soviet Union. Today few have much clue about the evolving threat of cyber warfare. Unlike nuclear weapons, which were too risky to use given the certainty of overwhelming retaliation, cyber attacks are low risk. Deterrence does not work on anonymous foes. Yet cyber attacks are arguably the greatest future danger to US national security.

Some hope Silicon Valley’s growing visibility in Washington might spark new ideas. If US politics runs on money, Big Data’s dollars are preferable to Wall Street’s. Tech companies used to disdain the US capital in the myopic view that their success had little to do with government. Today, the most rapid lobbying growth comes from the likes of Google and Facebook. Yet their priority is to repair the damage from the Edward Snowden leaks — strengthening privacy, rather than lifting research and development budgets, or opening up the US immigration system. They aim to curb the National Security Agency’s incursions rather than spread bold thinking to Washington.

Might 2016 produce an original debate over America’s future? It is tempting to believe so. Yet the contest is shaping into a traditional slugfest between those who want to shrink federal government and those who would conserve it. In the coming days, Hillary Clinton will launch her official candidacy. Having strung it out so long, she is expected to justify the wait with original thinking. In 2008 she won ovations by saying she was born in the middle of the last century, into the middle class in the middle of America. That will no longer bring blue collar voters to their feet. It is possible Mrs Clinton has spent the time coming up with new ideas to address America’s middle class squeeze — but unlikely. As it stands, her chief originality will be a promise to break the White House gender barrier. Nor should we expect Jeb Bush, or his rivals, to restock Washington’s intellectual cupboard. Gridlock suits the conservative base.

If the US is recovering in spite of Washington, might conservatives have a point? Alas not. Much of America’s innovative edge comes from public research. Washington tends to come up with new ideas during emergencies — necessity being the mother of invention. Silicon Valley’s prowess dates from the breakthroughs produced by cold war Pentagon spending. Even the technology behind hydraulic fracking, which has helped power the US job market recovery, comes from public investment in the aftermath of the 1970s oil shortages. The secret sauce of US capitalism is a history of collaboration with federal government. The two are now increasingly disconnected. Do not look to White House hopefuls to restore it.

1/19/2015 11:31 PM EST [Edited]

I’ve been talking about the author’s point for years. Drawing on my personal observations over the past four decades, I speak less on technology’s future impacts and more on its historical impact. Primarily, I’ve found that as technology and globalization advanced, long-held traditions in business management faded.
Coinciding with the rise in technology was the decline of the mutual-advantage relationship between employers and employees. Once, companies took pains to cultivate long-term relationships with its employees, creating such things as benefit packages and pension plans. Yes, labor unions paved the way for the institutionalization of those benefits, but more important is that smart companies cultivated loyalty and longevity with their employees. That, in turn, provided surety and stability for jobholders, which facilitated a more stable society and economy.
With the rise of technology, however, came a cutthroat competitiveness among employers. Constantly seeking the best and brightest—those at the cutting edge—companies continually traded out “old” talent for “new.” Employees, in turn, followed companies’ lead and started leaving employers for the highest bidders. Loyalty stopped being a goal. Longevity became irrelevant.

Other things changed as well—a shift in emphasis toward shareholders versus employees, which, despite the crash of the 90s, still prevails. And along with that came the pressure “to do more with less,” typically with great detriment to employees. Mobile phones and laptops emerged, leading to employer expectations for “24/7 employees.”
Add to that technology’s influence on globalization, which has made possible the outsourcing of American jobs and the avoidance of taxes by branching into other countries.
Many of the “old” ways were sound and served this country well. And many can be adapted to work today. It just takes some creative thinking. And that’s something technology really can’t do.

Robots – screwing US

About Jerry Frey

Born 1953. Vietnam Veteran. Graduated Ohio State 1980. Have 5 published books. In the Woods Before Dawn; Grandpa's Gone; Longstreet's Assault; Pioneer of Salvation; Three Quarter Cadillac
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