May 8, 2016

Utopia or Dystopia - Choose One

On Inaction and Automation: Part 1 - The Parable and The Problem

These days, robots are increasingly part of the public discourse. There exists significant fear that robots will destroy the job market and leave millions destitute. Meanwhile some people believe that robots will bring about a technological utopia where no one works and all enjoy a life of leisure. Both the utopia and the dystopia are possible, but neither will come about automatically. It will be our decisions - or lack of decisions - that steer our society towards abundance or doom.

The Parable

A friend once told me the following parable:

Imagine there is a small farming society that lives isolated from the outside world. Everything they need is produced in their community. Most of the people spend their time farming, and they make just enough food to survive plus a little extra to save for bad weather.

Now imagine that a magical piece of technology appears from nowhere that significantly increases the productivity of the farmers. Suddenly they can produce 50% more food with just 5% of the labor required.

This should be great news for all the members of this society, but it depends entirely on how they share the wealth created by this new technology. A key fact here is that collectively, the group cannot be worse off for having this invention - they get more food and have to work fewer hours. If they rotate who performs the remaining labor and share the extra food just as they would have before, they will all benefit greatly. But if some individuals try to claim the benefits for themselves, others will suffer. It is entirely up to the culture of the people to decide what should happen and what is acceptable.

This is the position we find ourselves in today. We all live on this Earth together. Collectively, we're self sufficient and don't (yet) take in any resources from beyond our home world. Technology, however, doesn't appear from nowhere. It is invented by individuals of all walks of life who are working hard to survive. Nature taught humankind that we all must fight for our survival and so the inventors of new technology work hard to gain wealth from their inventions. Every person is permitted to reap the profits for themselves with the idea that this reward will encourage future innovations from which we will all benefit.

The Breaking Point

Mostly this appears to work, but automation will test the limits of such an arrangement. Over the next 20 years, jobs will be replaced by automation at a rate never before seen in human history. Low wage workers who perform highly repetitive tasks will be replaced by robots, and high wage workers who produce their value by working at a computer will be replaced by software. Lawyers, pharmacists, engineers, truck drivers, retail and fast food workers will all be replaced by automation. All those people who get extra income by driving for Uber or Lyft will have to find another job.

Now, some people don't actually believe this will happen. Computers can never think like a human, they may say. Humans are special, they claim. But the state of technology proves that humans aren't particularly special when it comes to our ability to do valuable work. Computers haven't been very creative or flexible in the past, but that's all changing. Meanwhile computers can perform the same task flawlessly millions of times per second, operate continuously on pennies of electricity, require no breaks or rest, and can be duplicated indefinitely to meet any demand. Humans have to spend decades of their lives training while a computer can accept any software and immediately run it. Self driving cars pass my office every day and machine learning is breaking decades old barriers in software, allowing computers to perform tasks better than humans in a variety of fields. There are many examples to draw from but that's not the point here. The point is simply that software and robots will in a huge number of cases be a better choice for business people than hiring humans. And that's going to have a significant impact on our society.

The way things currently work, the doom and gloomers are right. If you don't have a job, things are pretty bleak. If you JUST lost your job you may be able to find a new one, but if you are unemployed long enough it becomes even harder to recover. And once a new piece of technology comes out that can replace humans in a specific task, the job market for that task will shrink rapidly. What will fast food workers or truck drivers do when their jobs get replaced? They'll have to compete with millions of other displaced workers who are in the same situation. The glut of labor will cause wages to crash for the remaining low skilled jobs, and workers who once earned a decent salary will be forced to live off of minimum wage. It's not just low skilled workers either - highly skilled workers will get replaced by software, and they'll be forced to move down the job ladder to lower wage tasks they can excel at. This will further stress the low skilled market.

In the 1980's when jobs were being moved overseas in record numbers, the caring words of the business leaders were "re-train". That was the message to the workers who grew up learning how to weld, bend sheet metal, or do some other factory labor. In other words, the wealthy people who got to keep their jobs told all the poor people who had lost their jobs that it wasn't their problem to worry about. And really, it wasn't. Moving jobs overseas worked really well for the business community, who has seen record growth in the last 30-40 years.

For the working class though, wages started to level out around 1970 and have been stagnant since 1980. Productivity is at an all time high but the benefits of that technology have mostly gone to the wealthy. The poor to get to enjoy cheap prices from places like Wal Mart, but their lower wages mean that the benefits cancel out. In technical terms, we say that the "real wage" for workers has gone down since 1980. As we've opened up the globe for competition, US workers have been forced to compete with workers in Asia and Mexico, and no amount of re-training has been able to end the decline. If competing with low wage foreign labor was tough on workers before, competing with zero wage robots is going to be worse.

As computers get better, low skilled humans will seem less and less desirable compared to automated systems. In much the same way that horses lost favor to the automobile for the transportation of goods, the average human will lose favor to a computer. Some jobs will be difficult to automate but those markets will still see an influx of new workers displaced from other fields. The result will be a further depression of the labor market even though productivity will shoot through the roof.

The business class will see significant growth from the increase in productivity, but for the vast majority of workers things will get much worse. Wages will go down and so too will opportunity. Those who in past generations would have hoped to own a house and a car will be happy just to survive. In a world where productivity is higher than it has ever been, the majority of people will have their sights set lower than any generation in the previous century. People will struggle just to get by.

Many will curse at the robots and software that took over their jobs. They see that wealth is tied to employment and will despise the technology that took away their work. But does that make sense? To damn the tools that bring humans more wealth? Imagine our parable again. What if one individual took ownership of the new technology and took all the benefit for themselves? What if, rather than giving out the extra food to those who no longer had work, the one who took ownership found a nearby town and traded the food for other goods to enjoy? This person would enrich themselves to the detriment of their fellow community members. These community members, perhaps rightfully outraged at this scenario, could choose to smash the machine and re-enter the agreement they had before where most of them had to work to survive. That certainly would put food back in the mouths of those who had lost work but it is far and away not the best option for the people.

What if, instead, the people questioned the ownership of the machine? After all, this machine appeared out of nowhere, so why should one individual own it? What if instead of smashing it, they all took collective ownership of the machine and its output? Now rather than reverting back to a subsistence lifestyle, the people could all enjoy a better life. It should be clear that this is a much better outcome for the people than smashing the machine that brings them prosperity.

Thus we see the decision we face as we head to an automated world. Do we want the wealth created by automation to go to all of us, or to an elite few? If we want to share that wealth, how do we ensure we achieve the desired outcome?

Enter: Communism

We've faced this question before. In the 19th century the world moved from a farming economy to an industrial economy, and many noted the inherent inequality between factory owners and the workers. The philosophers Karl Marx and Friedrich Engels observed that workers in a factory produce great wealth, but they do so for the factory owners. The workers themselves get paid only a small fraction of the value they create. The disparity between what the workers produce and what they receive in pay was referred to by Marx and Engels as a surplus, and it is a defining characteristic of capitalism that business owners receive the surplus from their workers. Business owners get wealthy, while workers struggle to survive.

For Marx and Engels, this arrangement made little sense. Collectively, the workers gave up enormous wealth to the business owners. Was it possible for the workers to instead capture that wealth for themselves? Marx and Engels believed it was. They believed workers could form a collective that owned the factory, direct a small portion of the wealth of that collective to manage the business, and take the rest of the wealth for members of the collective - the workers. In doing so, they would turn the capitalist system on its head. Instead of a few individuals receiving the benefit of the labor of many, the workers would capture the benefit of their own labor and direct a small portion of their funds to the various managerial tasks not done by the workers. All who worked would own their output.

This is what the laborers in our parable did when they took ownership of the machine. They could have found other work, competed with each other, and tried to purchase food from the individual who had originally taken the machine, but they found that they could be much better off if they owned the machine collectively.

The same is true for us now with automation. We could soon face an economy where a few elite corporations own the automation that runs the world. The machine that could free us all will be in our midst, but not in our possession. Individuals who used to work will be unemployed, and an elite few will enjoy prosperity never before seen in human history. The masses will struggle to find the funds to purchase what they need from those who control the automation.

At least, that is the dystopia many fear will become reality. And it seems clear that if we do not change our expectations, that is where we are headed. But if we can see the road we are headed down, we can change course.

A Way Forward

How can we solve this problem? How can we end the exploitation of unemployed workers when so much abundance from automation is at our fingertips?

The answer lies in ownership of the machine. Please see Part 2 of this post here: The Machine.