Saturday, December 24, 2016
Trump and the Future of Jobs in America
This is an expanded version of an op-ed piece I had in the Deseret News earlier this week.
On December 14, The New Yorker posted an article by Elizabeth Kolbert titled “Our Automated Future: How Long Will It Be before You Lose Your Job to a Robot?” She begins with the perhaps apocryphal story about how IBM’s Watson came to be. As the story goes, “an IBM executive named Charles Lickel was having dinner [at a restaurant] when he noticed that the tables around him had suddenly emptied out. Instead of finishing their sirloins, his fellow-diners had rushed to the bar to watch ‘Jeopardy!’ This was deep into Ken Jennings’s seventy-four-game winning streak, and the crowd around the TV was rapt. Not long afterward, Lickel attended a brainstorming session in which participants were asked to come up with I.B.M.’s next ‘grand challenge.’ The firm, he suggested, should take on Jennings.”
This, it turns out, was a much greater challenge than creating the computer that beat Gary Kasparov at chess. Of course Watson defeated both Jennings and his human nemesis, Brad Rutter. And the rest is history.
Except it is not. Watson was not the beginning, nor will “he” be the end of technology that can replace humans. Kolbert surveys several books that address the subtitle of her article, books such as The Industries of the Future, The Future of the Professions, Inventing the Future, and, especially, Martin Ford’s Rise of the Robots: Technology and the Threat of a Jobless Future. Ford cites a 2013 Oxford University study, which concludes that nearly half of the jobs in the United States are “potentially automatable,” perhaps within “a decade or two.” Yes, half.
Jobs, according to some MIT researchers, can be divided according to two different sets of criteria. They are either manual or cognitive. And they are either routine or nonroutine. The highest paying jobs are coginitive-nonroutine (think hedge fund managers and lawyers). The lowest paying jobs are manual-nonroutine (think emptying bedpans and cleaning hotel rooms). The jobs in the middle are the ones that are easiest to replace with technology.
This, of course, was a major issue in the recent presidential campaign, with Donald Trump promising to bring back blue-collar jobs (mostly manual-routine). The problem is that even if he were able to bring those jobs back (which is doubtful), they would soon be replaced by technology. In fact, they are being replaced by technology in China almost as fast as they are in the U.S.
In order to understand the ramifications of this phenomenon, you must first understand something about productivity. Businesses have long viewed productivity improvement as a panacea for almost all ills. But increasing productivity, as we define it, means that a company can produce either more product with the same number of workers or the same amount of product with fewer workers. Either way, though, the gains from increased productivity do not go to the workers. They go to the stockholders and executives. Generally, increased productivity leads to workers losing their jobs. It takes moral and humane managers (like the oft-cited James Lincoln of Lincoln Electric fame) to devise programs under which increased productivity benefits the workers.
This fact about productivity represents a good part of why we are seeing so much wealth inequality in our economy. The other part is that we have dropped the top marginal tax rate from above 90 percent to below 40 percent. And Trump’s economic proposals, if enacted, will drastically increase the inequality.
So, what do we do? Trump can’t turn the calendar back to 1965 (which is what he is really promising). Regardless of what he does, we are heading for a future in which more and more American workers will be either be replaced by technology or stuck in low-paying superfluous service jobs while most of the wealth continues to accumulate at the top. This is not a sustainable economy.
I don’t think any of us will be surprised to see truck drivers, waiters, cashiers, and even computer programmers replaced in the near future by automated “employees.” What is it that drives owners and executives to supplant human employees with technology? The simple answer is the bottom line. Short-term gains for stockholders (which generally include upper management) outweigh any other considerations, such as the duty corporations owe to their human employees or concern over the long-term health of the economy. (An economy in which there is insufficient demand, because of shrinking wages in the middle and lower classes, is an economy bound for collapse.) But as long as owners and executives view employees as a resource, a commodity, or a cost to be minimized, rather than as human beings who deserve to be treated as partners, nothing will change, and our future will be compromised.
One possible solution to this dilemma is to drastically increase worker ownership. This would slow the takeover of jobs by technology, since worker-owners would be less eager to replace themselves with machines. It would also spread the wealth more evenly. Eventually, if productivity keeps increasing, an accommodation might be reached in which the workday is shortened but the workers still receive full pay.
There are other options, but none of them work in an economy structured like the one Trump and most business leaders imagine for our future. For some reason, they cannot see the writing on the wall. They imagine that if they keep replacing human employees with technology, those displaced workers will somehow find high-paying jobs so that they can afford to buy all the stuff corporations are producing.
But we have already seen three shifts in the economy to accommodate the shrinking pay of the middle and lower classes. First, women entered the workforce, giving most families two wage earners to cover expenses. Second, workers started taking on second and third jobs to pay the bills. Third, they maxed out their credit cards and took out home equity loans. This all ended with the crash in 2008. There is no other shift that can be made. Unless businesses start hiring more people in decent-paying jobs, demand won’t be sufficient to keep the engine running. And tax cuts for billionaires is not the answer. Supply won’t magically increase just because the wealthy get even more money. They are sitting on massive amounts of cash right now, rather than investing it in new production (new jobs), because there is insufficient demand.
Of course, this raises the question I posed long ago toward the beginning of this blog adventure, namely, is it possible for an economy with limited resources operating on a finite planet to keep growing endlessly. The answer, I submit, is no. But no politician is willing to deal with this idea. And Trump wants not only to grow the economy at an unrealistic 4 percent, but do it by destroying the planet at the same time. Now there’s a recipe for long-term success.
What is obvious is that we need to start thinking outside the box, and we need to do it now. The recent presidential election was a major step in the wrong direction. But if we aren’t smart enough to recognize where we are going, we will not be ready for it when we get there, and that could be disastrous.