Rise of the Robots
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Rise of the Robots Technology and the Threat of a Jobless Future MARTIN FORD A Member of the Perseus Books Group New York 2015 CONTENTS INTRODUCTION Introduction ix Sometime during the 1960s, the Nobel laureate economist Mil- Chapter 1 The Automation Wave 1 ton Friedman was consulting with the government of a developing Chapter 2 Is This Time Different? 29 Asian nation. Friedman was taken to a large-scale public works proj- Chapter 3 Information Technology: ect, where he was surprised to see large numbers of workers wielding An Unprecedented Force for Disruption 63 shovels, but very few bulldozers, tractors, or other heavy earth-moving equipment. When asked about this, the government official in charge Chapter 4 White-Collar Jobs at Risk 83 explained that the project was intended as a “jobs program.” Fried- Chapter 5 Transforming Higher Education 129 man’s caustic reply has become famous: “So then, why not give the Chapter 6 The Health Care Challenge 145 workers spoons instead of shovels?” Friedman’s remark captures the skepticism—and often outright Chapter 7 Technologies and Industries of the Future 175 derision—expressed by economists confronting fears about the pros- Chapter 8 Consumers, Limits to Growth . and Crisis? 193 pect of machines destroying jobs and creating long-term unemploy- Chapter 9 Super-Intelligence and the Singularity 229 ment. Historically, that skepticism appears to be well-founded. In the United States, especially during the twentieth century, advancing tech- Chapter 10 Toward a New Economic Paradigm 249 nology has consistently driven us toward a more prosperous society. Conclusion 281 There have certainly been hiccups—and indeed major disruptions— Acknowledgments 285 along the way. The mechanization of agriculture vaporized mil- lions of jobs and drove crowds of unemployed farmhands into cit- Notes 287 ies in search of factory work. Later, automation and globalization Index 317 pushed workers out of the manufacturing sector and into new service jobs. Short-term unemployment was often a problem during these vii ix x Introduction Introduction xi transitions, but it never became systemic or permanent. New jobs were seeing was normal, and that the conditions they observed would were created and dispossessed workers found new opportunities. continue indefinitely. They invested heavily in developing farms and What’s more, those new jobs were often better than earlier coun- ranches on this seemingly fertile land. terparts, requiring upgraded skills and offering better wages. At no Within a decade or two, however, reality struck. The farmers time was this more true than in the two and a half decades follow- found that the overall climate was actually far more arid than they ing World War II. This “golden age” of the American economy was were initially led to believe. They had simply had the good fortune characterized by a seemingly perfect symbiosis between rapid tech- (or perhaps misfortune) to arrive during a climactic “Goldilocks nological progress and the welfare of the American workforce. As the period”—a sweet spot when everything happened to be just right for machines used in production improved, the productivity of the work- agriculture. Today in Australia, you can find the remnants of those ers operating those machines likewise increased, making them more ill-fated early investments: abandoned farm houses in the middle of valuable and allowing them to demand higher wages. Throughout what is essentially a desert. the postwar period, advancing technology deposited money directly There are good reasons to believe that America’s economic Goldi- into the pockets of average workers as their wages rose in tandem locks period has likewise come to an end. That symbiotic relationship with soaring productivity. Those workers, in turn, went out and between increasing productivity and rising wages began to dissolve spent their ever-increasing incomes, further driving demand for the in the 1970s. As of 2013, a typical production or nonsupervisory products and services they were producing. worker earned about 13 percent less than in 1973 (after adjusting for As that virtuous feedback loop powered the American economy inflation), even as productivity rose by 107 percent and the costs of forward, the profession of economics was enjoying its own golden big-ticket items like housing, education, and health care have soared.1 age. It was during the same period that towering figures like Paul On January 2, 2010, the Washington Post reported that the first Samuelson worked to transform economics into a science with a decade of the twenty-first century resulted in the creation of no new strong mathematical foundation. Economics gradually came to be jobs. Zero.2 This hasn’t been true of any decade since the Great De- almost completely dominated by sophisticated quantitative and sta- pression; indeed, there has never been a postwar decade that pro- tistical techniques, and economists began to build the complex math- duced less than a 20 percent increase in the number of available jobs. ematical models that still constitute the field’s intellectual basis. As Even the 1970s, a decade associated with stagflation and an energy the postwar economists did their work, it would have been natural crisis, generated a 27 percent increase in jobs.3 The lost decade of for them to look at the thriving economy around them and assume the 2000s is especially astonishing when you consider that the US that it was normal: that it was the way an economy was supposed to economy needs to create roughly a million jobs per year just to keep work—and would always work. up with growth in the size of the workforce. In other words, during In his 2005 book Collapse: How Societies Choose to Succeed those first ten years there were about 10 million missing jobs that or Fail, Jared Diamond tells the story of agriculture in Australia. In should have been created—but never showed up. the nineteenth century, when Europeans first colonized Australia, Income inequality has since soared to levels not seen since 1929, they found a relatively lush, green landscape. Like American econ- and it has become clear that the productivity increases that went into omists in the 1950s, the Australian settlers assumed that what they workers’ pockets back in the 1950s are now being retained almost xii Introduction Introduction xiii entirely by business owners and investors. The share of overall na- The answer to the question about your speed in the car, by the tional income going to labor, as opposed to capital, has fallen pre- way, is 671 million miles per hour. In that final, twenty-eighth min- cipitously and appears to be in continuing free fall. Our Goldilocks ute, you would travel more than 11 million miles. Five minutes or so period has reached its end, and the American economy is moving at that speed would get you to Mars. That, in a nutshell, is where into a new era. information technology stands today, relative to when the first prim- It is an era that will be defined by a fundamental shift in the re- itive integrated circuits started plodding along in the late 1950s. lationship between workers and machines. That shift will ultimately As someone who has worked in software development for more challenge one of our most basic assumptions about technology: that than twenty-five years, I’ve had a front-row seat when it comes to machines are tools that increase the productivity of workers. Instead, observing that extraordinary acceleration in computing power. I’ve machines themselves are turning into workers, and the line between also seen at close hand the tremendous progress made in software the capability of labor and capital is blurring as never before. design, and in the tools that make programmers more productive. And, All this progress is, of course, being driven by the relentless ac- as a small business owner, I’ve watched as technology has trans- celeration in computer technology. While most people are by now formed the way I run my business—in particular, how it has dra- familiar with Moore’s Law—the well-established rule of thumb that matically reduced the need to hire employees to perform many of says computing power roughly doubles every eighteen to twenty-four the routine tasks that have always been essential to the operation months—not everyone has fully assimilated the implications of this of any business. extraordinary exponential progress. In 2008, as the global financial crisis unfolded, I began to give Imagine that you get in your car and begin driving at 5 miles serious thought to the implications of that consistent doubling in per hour. You drive for a minute, accelerate to double your speed to computational power and, especially, to the likelihood that it would 10 mph, drive for another minute, double your speed again, and so dramatically transform the job market and overall economy in com- on. The really remarkable thing is not simply the fact of the doubling ing years and decades. The result was my first book, The Lights in but the amount of ground you cover after the process has gone on for the Tunnel: Automation, Accelerating Technology and the Economy a while. In the first minute, you would travel about 440 feet. In the of the Future, published in 2009. third minute at 20 mph, you’d cover 1,760 feet. In the fifth minute, In that book, even as I wrote about the importance of acceler- speeding along at 80 mph, you would go well over a mile. To com- ating technology, I underestimated just how rapidly things would in plete the sixth minute, you’d need a faster car—as well as a racetrack. fact move forward. For example, I noted that auto manufacturers Now think about how fast you would be traveling—and how were working on collision avoidance systems to help prevent acci- much progress you would make in that final minute—if you doubled dents, and I suggested that “over time these systems could evolve into your speed twenty-seven times.