Rise of the Robots 9780465059997-text.indd i 2/12/15 12:46 PM ALSO BY Martin Ford: The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future 9780465059997-text.indd ii 2/12/15 12:46 PM Rise of the Robots Technology and the Threat of a Jobless Future MARTIN FORD A Member of the Perseus Books Group New York 9780465059997-text.indd iii 2/12/15 1:03 PM Copyright © 201 5 by Martin Ford Published by Basic Books, A Member of the Perseus Books Group All rights reserved. Printed in the United States of America. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For information, address Basic Books, 250 West 57th Street, New York, NY 10107. Books published by Basic Books are available at special discounts for bulk purchases in the United States by corporations, institutions, and other organizations. For more information, please contact the Special Markets Department at the Perseus Books Group, 2300 Chestnut Street, Suite 200, Philadelphia, PA 19103, or call (800) 810-4145, ext. 5000, or email [email protected]. Designed by Pauline Brown Library of Congress Cataloging-in-Publication Data Ford, Martin (Martin R.) Rise of the robots : technology and the threat of a jobless future / Martin Ford. pages cm Includes bibliographical references and index. ISBN 978-0-465-05999-7 (hardback) — ISBN 978-0-465-04067-4 (e-book) 1. Labor supply—Effect of automation on. 2. Labor supply— Effect of technological innovations on. 3. Employment forecasting. 4. Technological innovations—Economic aspects. I. Title. HD6331.F58 2015 331.13'7042—dc23 2014041327 10 9 8 7 6 5 4 3 2 1 9780465059997-text.indd iv 2/12/15 12:46 PM To Tristan, Colin, Elaine, and Xiaoxiao 9780465059997-text.indd v 2/12/15 12:46 PM 9780465059997-text.indd vi 2/12/15 12:46 PM CONTENTS Introduction ix Chapter 1 The Automation Wave 1 Chapter 2 Is This Time Different? 29 Chapter 3 Information Technology: An Unprecedented Force for Disruption 63 Chapter 4 White-Collar Jobs at Risk 83 Chapter 5 Transforming Higher Education 129 Chapter 6 The Health Care Challenge 145 Chapter 7 Technologies and Industries of the Future 175 Chapter 8 Consumers, Limits to Growth . and Crisis? 193 Chapter 9 Super-Intelligence and the Singularity 229 Chapter 10 Toward a New Economic Paradigm 249 Conclusion 281 Acknowledgments 285 Notes 287 Index 317 vii 9780465059997-text.indd vii 2/12/15 12:46 PM 9780465059997-text.indd viii 2/12/15 12:46 PM INTRODUCTION Sometime during the 1960s, the Nobel laureate economist Mil- ton Friedman was consulting with the government of a developing Asian nation. Friedman was taken to a large-scale public works proj- ect, where he was surprised to see large numbers of workers wielding shovels, but very few bulldozers, tractors, or other heavy earth-moving equipment. When asked about this, the government official in charge explained that the project was intended as a “jobs program.” Fried- man’s caustic reply has become famous: “So then, why not give the workers spoons instead of shovels?” Friedman’s remark captures the skepticism—and often outright derision—expressed by economists confronting fears about the pros- pect of machines destroying jobs and creating long-term unemploy- ment. Historically, that skepticism appears to be well-founded. In the United States, especially during the twentieth century, advancing tech- nology has consistently driven us toward a more prosperous society. There have certainly been hiccups—and indeed major disruptions— along the way. The mechanization of agriculture vaporized mil- lions of jobs and drove crowds of unemployed farmhands into cit- ies in search of factory work. Later, automation and globalization pushed workers out of the manufacturing sector and into new service jobs. Short-term unemployment was often a problem during these ix 9780465059997-text.indd ix 2/12/15 12:46 PM x Introduction transitions, but it never became systemic or permanent. New jobs were created and dispossessed workers found new opportunities. What’s more, those new jobs were often better than earlier coun- terparts, requiring upgraded skills and offering better wages. At no time was this more true than in the two and a half decades follow- ing World War II. This “golden age” of the American economy was characterized by a seemingly perfect symbiosis between rapid tech- nological progress and the welfare of the American workforce. As the machines used in production improved, the productivity of the work- ers operating those machines likewise increased, making them more valuable and allowing them to demand higher wages. Throughout the postwar period, advancing technology deposited money directly into the pockets of average workers as their wages rose in tandem with soaring productivity. Those workers, in turn, went out and spent their ever-increasing incomes, further driving demand for the products and services they were producing. As that virtuous feedback loop powered the American economy forward, the profession of economics was enjoying its own golden age. It was during the same period that towering figures like Paul Samuelson worked to transform economics into a science with a strong mathematical foundation. Economics gradually came to be almost completely dominated by sophisticated quantitative and sta- tistical techniques, and economists began to build the complex math- ematical models that still constitute the field’s intellectual basis. As the postwar economists did their work, it would have been natural for them to look at the thriving economy around them and assume that it was normal: that it was the way an economy was supposed to work—and would always work. In his 2005 book Collapse: How Societies Choose to Succeed or Fail, Jared Diamond tells the story of agriculture in Australia. In the nineteenth century, when Europeans first colonized Australia, they found a relatively lush, green landscape. Like American econ- omists in the 1950s, the Australian settlers assumed that what they 9780465059997-text.indd x 2/12/15 12:46 PM Introduction xi were seeing was normal, and that the conditions they observed would continue indefinitely. They invested heavily in developing farms and ranches on this seemingly fertile land. Within a decade or two, however, reality struck. The farmers found that the overall climate was actually far more arid than they were initially led to believe. They had simply had the good fortune (or perhaps misfortune) to arrive during a climactic “Goldilocks period”—a sweet spot when everything happened to be just right for agriculture. Today in Australia, you can find the remnants of those ill-fated early investments: abandoned farm houses in the middle of what is essentially a desert. There are good reasons to believe that America’s economic Goldi- locks period has likewise come to an end. That symbiotic relationship between increasing productivity and rising wages began to dissolve in the 1970s. As of 2013, a typical production or nonsupervisory worker earned about 13 percent less than in 1973 (after adjusting for inflation), even as productivity rose by 107 percent and the costs of big-ticket items like housing, education, and health care have soared.1 On January 2, 2010, the Washington Post reported that the first decade of the twenty-first century resulted in the creation of no new jobs. Zero.2 This hasn’t been true of any decade since the Great De- pression; indeed, there has never been a postwar decade that pro- duced less than a 20 percent increase in the number of available jobs. Even the 1970s, a decade associated with stagflation and an energy crisis, generated a 27 percent increase in jobs.3 The lost decade of the 2000s is especially astonishing when you consider that the US economy needs to create roughly a million jobs per year just to keep up with growth in the size of the workforce. In other words, during those first ten years there were about 10 million missing jobs that should have been created—but never showed up. Income inequality has since soared to levels not seen since 1929, and it has become clear that the productivity increases that went into workers’ pockets back in the 1950s are now being retained almost 9780465059997-text.indd xi 2/12/15 12:46 PM xii Introduction entirely by business owners and investors. The share of overall na- tional income going to labor, as opposed to capital, has fallen pre- cipitously and appears to be in continuing free fall. Our Goldilocks period has reached its end, and the American economy is moving into a new era. It is an era that will be defined by a fundamental shift in the re- lationship between workers and machines. That shift will ultimately challenge one of our most basic assumptions about technology: that machines are tools that increase the productivity of workers. Instead, machines themselves are turning into workers, and the line between the capability of labor and capital is blurring as never before. All this progress is, of course, being driven by the relentless ac- celeration in computer technology. While most people are by now familiar with Moore’s Law—the well-established rule of thumb that says computing power roughly doubles every eighteen to twenty-four months—not everyone has fully assimilated the implications of this extraordinary exponential progress. Imagine that you get in your car and begin driving at 5 miles per hour. You drive for a minute, accelerate to double your speed to 10 mph, drive for another minute, double your speed again, and so on. The really remarkable thing is not simply the fact of the doubling but the amount of ground you cover after the process has gone on for a while.