Automation is collapsing our economy

AUTOMATION

The standard [Anti-Luddite argument is that as jobs are taken by automation in one field people start working in another field. This is reasonably backed by history but there is no evidence to assume it will hold true indefinitely and significant evidence it is now not holding true anymore.

The introduction of the steam engine and industrial machines first affected agriculture. Automated thrashers, cotton pickers, combines rendering most agriculture jobs obsolete decades to centuries ago. Agriculture employed (or enslaved) over 70% of the American population back in 1800
Today it only accounts for 2% of the labor force, yet produced enough food for over 60 times the 1800 population (not including food relief or sales to other countries around the world). So if agriculture went from 70% to 2%, all the workers had to go somewhere and they did: into manufacturing. But by 1950 the so called golden age of US manufacturing 35% of the labor force was working in factories, today that number is 9%. Yet US manufacturing has only risen in production and is still the worlds largest manufacturing center in gross production. [http://www.shopfloor.org/2011/03/u-s-manufacturing-remains-worlds-largest/18756]

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Today 80% of the labor force in the USA is in the “Service sector”, but automation is making inroads in that as well. In both Federico Pistono book "Robots will Steall Your Jobs but that's OK" and Martin Ford book "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future" they provide a break down of the most common jobs in the USA today. For example Cashiers are 2.24% of all American jobs, but now self-checkout lanes are being installed and can cut down the number of cashiers by 75%. Truck drivers (the most common job in the USA) are 2.61% but automated trucks will likely start taking those jobs as well. Even if a truck driver is required in the automated truck as backup the driver can now sleep behind the wheel while the truck gets further without having to stop so the driver can sleep, allowing fewer drivers to do more deliveries. Secretaries (2.22%) are being replaced by digital assistance. But no these people will move on to new fields, so the anti-Luddite claims. What new fields are there? In the list of jobs from most common to least you have to go down to 34th on the list to get to a career that has not existed more then 70 years ago: Computer software engineer at 0.74% of the job market.

Well maybe people working in service today could get work in intellectual and skilled labor fields. Unfortunately there are in fact a plethora of inroads automation is making in those fields as well: pharmacist replaced by robots, software that is replacing paralegals and lawyers in document review, software that can write journalistic sports and basic business reports, image recognition software that replaces radiologist. It is argued that these things augment and assist people in these fields but if automation helps one person do more of a task then would it not mean that now less people need to do those tasks?

Another way to look at this is as a ratio of number of products produces divided by number of people needed to produce said products. Over the centuries this ratio has been going up in general for most products. As a result everyone has been able to get a job even with more and more automation because automation just means more products per producing person. Everyone can be productive because productivity was matched by demand, but can this stay true forever? Every product requires some amount physical resources and energy to make as well as demand from end users. Lets look at energy (as material resources are just a matter of how much energy is needed to to extract, refine and move them): For the last 3 centuries world energy consumption has been growing by ~3% per year. Right now it is at 15x10^12 watts (15 Terawatts), at 3% growth it would be at 150 TW by 2091, by 2345 our energy consumption would be equal to all the energy in sunlight hitting the earth (2.7x10^17 W)! Even if we could produce all that power by nuclear fusion or something the waste heat would exceed solar heating of the planet! The surface temperature of the earth would raise to boiling, literally boiling in just a few years! If we keep projecting 3% growth by the year 3058 humanities energy consumption would exceed the energy output of the entire sun (3.8x10^26 W)! And by the year 3760 humanity energy consumption would exceed the output of every single star in the galaxy (3.8x10^35 W)! Hence why there is no such thing as sustainable growth, it is PHYSICALLY IMPOSSIBLE! Pistono does a good job explaining this exponential growth problem but fails to really connect it to automation, I will now do that.

Thankfully world total energy consumption is starting to stagnate (actually falling in 2009!) and consistently falling in many developed countries. World population growth is slowing (and will hopefully plateau this century) and some developed countries even have negative growth. But though that may save us from physical limits of energy and matter its not good for production. How are we to produce more products if there is not enough power and raw materials to make them and consumers to buy them? If automation keeps growing the ratio but the number of products can't keep go up, then number of people needed to make them must go down.

Imagine for a moment a restaurant where the owner gets a machine to replace most if not all the workers, anyone that has worked at a McDonalds as a teenager can tell you that it would not be very hard to replace the assembly line of human burger makers with a machines that cooks the meat paddies, drops them on the bread buns, drops down pickles, lettuce, tomatoes and squirt of condiments. Now lets say the workers ran off to start restaurant of there own using the same model. Thus multiplying the number of restaurants, everyone gets a high paying job but would there be enough consumers for them all? Agriculture has experience several fold increases in products to producers ratio but the number of consumers has increase to match it so the ratio has increased much less if we look at it from a products to consumer ratio rather the products to producers ratio. As is Americans are eating way too much, they are morbidly obese and dying of diabetes and heart disease: we would need to institute real vomitoriums to get people to “consume” more food! But this scenario does not just play out with foods. Imagine cellphone makers replace all there labors with machines, and that magically those labors got the education to design new cellphones and manage new cellphone companies, with a production to R&D ratio of greater then 100:1, could we all stand to buy 100 cell phones to keep all those new cell phone companies afloat?

Now some may argue that automation can't take ALL jobs, well at present and for the near future that seems true. Most automation is done by at best Weak Artificial Intelligence: very “smart” at a specific task and completely incompetent at anything else. The [ulr=http://en.wikipedia.org/wiki/Watson_%28computer%29]IBM's Watson supercomputer and DeepQA program[/url] can and has trumped the best humans at answering even cryptic questions from memorized knowledge, it certainly smart at that and will likely replaced tech support workers and research aids, but it can't create new know data, or assemble a product or drive a car. Other WAI though can do each one of those task from evolving software that discovers new technologies, to image recognizing factor robots to self driving cars, but WAI can only do those tasks they are specifically programmed and built for: they can't think about or are even aware of "anything" else, they have no consciousness. A Strong Artificial Intelligence that could solve or adapt to any problem a human can and/or could qualify as conscious is likely decades away, and some theologians and philosophers say its impossible because of some supposed mystical and supernatural property of the human brain. But all that is irrelevant: machines don't need to take all jobs, just enough, fast enough, its simply a matter of automation taking jobs and incomes faster then they can be replaced.

Imagine machines will soon replace most service jobs, what jobs are left? Maintaining the machines? Sure but only a few people are needed to do that verse all the number of people who did those jobs the machines replaced. Ok how about jobs as engineers, biochemist, inventors... but those require extensive educations, above average intelligence and creativity. Ok how about artist and craftmen? Aside for the need for creativity and skill again, not enough people will be around to buy all those arts and crafts. There won't be more people having plumbing problems and needing more plumbers, having electrical problems and needing more electricians, heck if you have a computer problem these day you usually contact a machine first that can answer some of your problems rather then a paid specialist.

If automation enters an industry but the industry can't grow to match (because of physical limitation at most), then its work force must shrink, we have the historical drop of agriculture and manufacture jobs as proof of that. The profits that was taken to pay wages now goes up to the owners of the businesses, and the unemployed workers must compete in a shrinking job market, this would cause incomes to drop, middle class to shrink and become poor, the poor grow poorer and the rich to grow richer. That is exactly what is happening today! Stock markets and capital gains are higher then they have ever been before, yet unemployment is up, people are getting lower and lower paying part time jobs. The middle class is shrinking into poverty.

Much of this is blamed on outsourcing, a problem only in that its giving someone else “your” job. Outsourcing is a problem for the working population of developed nations, it drives salaries down to the lowest common denominators of the world. But truth be known machines are now competing with developing country's cheap practically slave labor! For example Foxcon the Taiwanese electronic giant that assembles all Apple products of all things is beginning to to automate. It all a matter of when will machines cost less then a practical slave in a undeveloped country. Also unskilled impoverished labors can't compete in quality verse the precision of automatons, nor will automatons commit suicide or demand pay raises.

This can't continue for long. If more products could be produced maybe their price would drop and the ever poorer people could still buy them but as I covered before there are fundamental limits in energy and materials that we appear to already be hitting that limit production. As the people get poorer they can't buy the products anymore. So demand will drop, and that means the rich will start to see profits drop. In fact the economy of individual nations and thus every nation because of globalization will become increasingly unstable and fall into recessions one after another. Oscillating wildly or possibly even entering depressions until solutions are implement.

and I will talk about the solutions soon enough, some of which could lead to a future as wonderful as today is to a black slave of 1800 America, but for now, does anyone disagree with the automation being the fundamental cause of our economic woes?

 

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As your graph shows as automation increases the jobs have to decrease. The ultimate for an engender is to get himself out of the job, So eventually service jobs will increase to a point . So we expected we would export our good to undeveloped country and keep them from developing , so they will be a source of a raw material , and will sell them our goods.

 

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I don't think that is practical, nor is that what is happening today, many developing nations are rightfully striving to be independent of the developed countries in NEEDing high value goods from them.

Also please don't quote my WHOLE thread starter post, it takes up to much room.

 

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That sentence is self-contradictory. The fact that it has before is exactly why we have reason to predict it will again. That's how science works! "Indefinitely"? I don't know, but for the forseeable future anyway. The piece you are missing in your logic is supply and demand. If unemployment goes up, labor gets cheaper and new jobs are created. Right now, for example, we are seeing an increase in "insourcing", bringing back previously outsourced manufacturing and service jobs.

That would be a useful stat if the jobs were identical to what they were 70 years ago, but they aren't.

That trend has stopped in the developed world because energy intensity has been decreasing for about 30 years. We do more with less energy than we used to.

Not true. Unemployment has been dropping for almost 4 years and with it, poverty rate is dropping (after a peak 2 years ago) and incomes are rising.

You'd be better off looking at the raw stats than looking at Huffington Post. That's basically a half-tabloid and they highly sensationalize/mislead to create more interesting articles. In this one they use a common cherry-picking tactic that draws a line between two points and ignores what happens in between. So they compare 2007 and 2009 to today and say median income is falling when in reality, today, it is rising. It peaked in 2008 just before the recession, dropped for two years, then started rising again.

http://www.census.gov/hhes/www/income/data/historical/household/

[edit] Ok, that was perhaps a touch unfair. Since income data lags by 6 months and that article is a year out of date, they didn't have the 2011 data yet, which is the most recent data available today. We're still a few months away from the 2012 data, but based on the fact that unemployment is still falling month to month, it is reasonable to expect median income rose in 2012 as well. Still, if they know anything about economics, they should know that job markets lag the recovery by a couple of years.

 

If a rabbit ran into a tree stump and you ate it and then decide to wait by the tree stump until it happened again would you call that science? There is a fundamental difference between now and the past: in the past production increased exponential, now it doesn't grow has slow significantly and even plateauing off in many countries, actually falling for some developed nations. Without increase production to make up the difference automation does in the ratio between products and producing workers (and also the ratio between products and consumers not going to increase much either), jobs must be cut and total wages reduced.

Counter to the evidence I provided above.

Low paying jobs! Now everyone got to do several part time jobs most of which they hate just to make ends meet.

Yeah because of automation, as a result the profits of that reshoring is go primarily to the business owners and not into enough new high paying jobs to make up the difference. Did you not look at the graph of US manufacturing up there? Percentage of labor forces has decreased but production has only gone up.

"According to the Financial Times article, if 10% of China’s electronics production was moved to the U.S., China would lose 300,000 jobs. Yet, just 40,000 new jobs would be created in the U.S. Put another way, if all of China’s manufacturing output was magically transported to the U.S. tomorrow, the U.S. unemployment rate would decline by only 2.75 percentage points after accounting for the effects of automation."
http://knowledgetoday.wharton.upenn.edu/2013/01/rethinking-re-shoring/

There are fundamental limits to demand, we can't keep producing more, there won't be enough people to buy it all. Look at Japan, stagnant economic growth, negative population growth, a lot of make-work programs, deflating currency because income goes down, highest suicide rate in the world, that likely the future of many more developed nations.

Really?

http://www.wnd.com/2013/01/heres-the-real-unemployment-rate/
http://online.wsj.com/article/SB10000872396390443890304578006671572581156.html
http://www.huffingtonpost.com/2012/07/22/us-poverty-level-1960s_n_1692744.html

Do you know what inflation is? US value of the dollar dropped by 3.2% from 2010-2011 So let see income in non-adjusted dollars went up from $20,000 to $20,262 for the Lowest income bracket from 2010-2011, but re-adjusted for inflation it went down to $19,614, In fact only income bracket that grew was the top 5%.

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"While the fact that a record number of Americans are living in poverty should not surprise anyone at this point, what should surprise many is that according to Table P-5 of the Census report of (Lack of) Income, the median male is now worse on a gross, inflation adjusted basis, than he was in... 1968! While back then, the median income of male workers was $32,844, it has since risen declined to $32,137 as of 2010. And there is your lesson in inflation 101 (which we assume is driven by the CPI, which likely means that the actual inflation adjusted income decline is far worse than what is even reported)"
http://www.zerohedge.com/news/median-male-worker-makes-less-now-43-years-ago


"The top 10 percent of Americans have experienced rapid income growth over the last 40 years, but the bottom 90 percent haven’t been so lucky. In fact, average income rose just $59 from 1966 to 2011 for the bottom 90 percent once those incomes were adjusted for inflation."
http://thinkprogress.org/economy/20...ercent-of-americans-grew-just-59-in-40-years/

 

Yup. Looks like the fucking sheep revolution all over again. Ask the Scots and English how that turned out.

 

Enlighten me please.

 

ElectricFetus, I linked the whole income database, which includes an xls spreadsheet for median income and it IS inflation adjusted. I said it went up in 2011 and you posted a graph that stops in 2010.

Also you need to be consistent with your stats, otherwise it makes you look dishonest. If you say "unemployment rate" that can only mean the BLS unemployment rate. Bringing up an unofficial "true unemployment rate" is a bait and switch.

I'll give a more detailed breakdown of the stats when I get home from work.

(Not that intra-cycle stats are all that meaningful in showing long term trends to begin with)

 

Oh so then my links that are reading and quoting the same statistics are either making an egregious error or lying? Here look zerohedge is quoting straight from the censure report: http://www.census.gov/hhes/www/income/data/historical/people/2010/P05AR_2010.xls

Here another one take from the Census Bureau again, Showing median income when adjusted for inflation has stagnated over the last 20 years and has been falling since 2007.

Here is from wiki:

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If they got it wrong GO FIX IT!

So are you saying we don't have a problem with people simply giving up on getting jobs, people that are retiring early or at the very least people that are settling of underemployment?

 

I checked again and I did indeed read the wrong column in the median income stats. That doesn't change the other problems here, but in any case, I apologize

 

No, I'm simply saying that when you mismatch a stat and a label, it is misleading.

 

What other problem?

 

I cited alot of evidence that is what is happening today, ergo realistic.

And that has to do with the price of cheese, how?

 

It is not the fundamental cause of our current economic woe. But it is a long-term concern. As AI evolves, there will come a time when human labor becomes obsolete. And our economy is far from collapsing. It was on the brink of collapse 4+ years ago when President Obama was sworn into office.

 

I'd like to see an AI fix a clogged sewer line that was broken. It would have to drive to the job, analyze the problem , talk with the customer, figure which types of machine would be the best to get the job done because there are many things that clog pipes and one is a break, determine where the break is, dig up the yard to find the break, fix that with appropriate fittings then make sure all is working properly. There are many other examples I can site for you that an AI couldn't do, repairing cars comes to mind or odd jobs around the house.

 

Our economic problems started over 40 years ago when they allowed business to move overseas into China, Philippines and elsewhere to cut labor rates that were , as the businesses said, to high in America. Then Congress applied no tariffs or duties to goods made overseas so they would be competitive with what Americans were making here. That put all American businesses almost out of a job for they couldn't compete with 1.00 a day labor rates plus no health care or pensions.

So thank your Congress for not doing anything to help the American workers at all, and they still don't to this day. Congress was controlled by Democrats when this all started so remember that but today both are responsible for the economic unfairness that it has given to overseas manufacturers.

 

I think you missed the part about “when”. Today AI and robots are not able to do the tasks you referenced. That will not be the case decades into the future. History is littered with people who have held positions similar to yours and they have all, without exception, been proven wrong.

 

LOL, Oh Buddha, what can I say. Just what are our economic problems? They didn’t begin 40 years ago. The facts are today we are much better off than we were 40 years ago. We have more purchasing power. We are living longer. We are healthier. We have easy access to all sorts of consumer goods.

Protectionism doesn’t work. It never has. Open market competition works. That is what history has repeatedly demonstrated. There is a problem in the US; it’s called “income inequality”. And it has nothing to do with foreign trade. It has everything to do with the wealthy in this country transferring wealth from the middle classes into their pockets (e.g. changes in the tax code and the use of government to protect and foment oligopolies with legislation like Medicare Part D which was initiated and passed by a Republican Congress and signed into law by a Republican President). And they have been able to do that by manipulating and deceiving the middle classes with people like Rush Limbaugh and organizations like Fox News and any of the many Koch Brother political activities.

http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States

 

Our Economy is collapsing because of...

AUTOMATION

The UNION are destroying this country's economy , and if nothing will be done we will collapse like the USSR economy.

 

That's inevitable. Energy is the primary mover of economies. We could have an economy like China's but I think that's the equivalent of collapse.