Will Automation Lead to Economic Collapse?

Will the future be filled with cool technologies and endless opportunities or will our own creations lead to eventual doom?

I tend to think the former. Technology has seemingly endless ability to improve the health, freedom, and happiness of our lives. Even optimistic futurists like Ray Kurzweil and James Canton admit, however, that the road to advancing technology is fraught with dangers. Super viruses, artificial intelligences run amok, environmental calamity – science has its threats as well as its promises. Yet there could be one near term problem that even futurists tend to ignore – economic collapse. Martin Ford, a silicon valley computer engineer, entrepreneur, and blogger has written The Lights In The Tunnel, a book which explores the economic implications of a world which is becoming increasingly automated. Ford proposes that in the upcoming years robots and computer programs will edge human workers out of their jobs and that unless we take drastic actions this will reduce mass market purchasing power, destroy consumer confidence, and shut down the global economy. Ford has the reader envision these changes during a thought experiment where lights in a tunnel represent purchasing power in the mass market (hence the title). Even after discussing the book with the author, I’m not convinced that The Lights In The Tunnel is an accurate prediction of our future, but I wanted to spread the question: what does increased automation mean for our economy?

It’s hard to deny that robots and computers will eventually take over for humans in many industries. Already we’ve seen how robots like the Flexpicker and Adept Quattro excel at sorting and moving goods in a manufacturing environment. More humanoid creations, like Kawada’s Nextage or Honda’s ASIMO, could take on even more human-like tasks. And then there are the software programs. We’ve recently showcased how sports journalists and other news people could one day face serious competition from virtual writers and performers. Everywhere, automation is progressing and taking over more jobs. Even vending machines are starting to eliminate the needs for some human workers.

 

Is the Fallacy Itself a Fallacy?

Yet even as technology removes some jobs, it creates others. For every worker taken off the assembly line there’s another added to the maintenance team, or two who become consultants. We’ll never automate away all the jobs, will we? Depends on how advanced the machines become.

Back in the industrial revolution, a group of English textile workers protested the use of mechanized looms. These were the Luddites, who believed that jobs lost to machines would lead to economic ruin. Obviously they were wrong. From these protesters modern economists have derisively coined the Luddite Fallacy – the belief that labor saving technologies will increase unemployment. That fallacy is one of the key issues debated in The Lights In The Tunnel (here after TLITT).

In TLITT, Ford argues that the Luddite Fallacy will only remain a fallacy so long as human capability exceeds technological capability. That is, as long as humans are able to improve faster (or as fast as) machines, humans cannot be fully replaced. Ford worries that we’re approaching a point where machines will exceed human performance to such a degree that the Luddite Fallacy will fall apart. Once a superior automated workforce is created, it could take over a large portion of the jobs in our global market.

Much to Ford’s credit, he considers the implications of technology far beyond the loss of manufacturing jobs. TLITT emphasizes that many high paying positions (research lawyers, software engineers, radiologists, etc) could be automated before more mundane ones (mechanic, housekeeper). Specialized fields with algorithmic approaches to problems can be synthesized. Already, the US and many European countries outsource tech support and similar positions to India. Eventually, Ford argues, they’ll be outsourcing positions to computers.

TLITT goes on to predict some pretty awful results from this widespread automation. With few high paying jobs, there will be less people able to buy goods. Sure, a few robotics corporations and software companies will create a new generation of trillionaires, but the number of consumers with middle class purchasing power will diminish. People will sense that purchasing power is dropping and consumer confidence will also decrease. Eventually all the wealth will be consolidated in a relative few, but with no one to sell to, those wealthy will struggle as the economy continues to wither.

Critiques

While Ford proposes a good thought experiment, and pulls no punches as he explores all of its implications, I don’t think his assumptions can go unchallenged.

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