The Future Imperfect
The IT department of a U.S. corporation recently terminated around 250 skilled technical employees, replacing them with less skilled and expensive ones; then hiring some others to produce "more innovations."
We are describing capitalism’s "creative destruction," the human
costs dating back to the 18th century enclosure movement in England that drove
workers from the farm to the industrializing economy. 1 But now
economic forces and technological progress might even threaten work itself. Silicon
Valley entrepreneur and author Martin Ford (2009) writes that outsourcing work
abroad is but a precursor to full automation. Eventually, workers
will be replaced by computer systems that can program (in the above
maintain) themselves. The economy will then be all supply and no effective
demand. Are the robots coming?
A large number of highly accomplished Silicon Valley engineers
and authors are furthermore becoming alarmed at the rapid technological
developments of genetics, nanotechnology, and robotics (GNR), in the latter
case according to Moore’s law. 2 In an essay, “Why the Future Doesn't Need Us,” Bill Joy, a cofounder of Sun Microsystems, likens the
development of these technologies to the development of the atomic bomb in the
1940s; except these technologies are being developed commercially rather than
by governments, and are therefore not under control. In that article, he writes that the dangers
of these Pandora’s box technologies lie in the fact that they are self-
replicating. You only need to produce one highly intelligent computer program
or develop one instance of nanotechnology capable of enveloping the
biosphere - and then if they escape they will multiply, causing something very
bad to happen. Taking an economic view, companies will adopt these technologies
for competitive reasons if they result in a less expensive way of doing things.
But will technology take over entirely? How do models behave
when confronted with, as a Wall Street researcher said, "life"?
The answer is, not quite perfectly. We cite two examples:
The real world is anything but placidly Gaussian. As we
illustrated in "The Nature of Economic Equilibrium,” (using yearly data), the error-correcting willingness of investors to buy stocks (a proxy for the U.S. stock market) is
barely mean reverting, when it is under the control of the Fed. When U.S.
consumer behavior changes, the financial system changes, when different
international forces impinge, the flexible markets will very simply adjust,
changing previous correlation coefficients and regression parameters. Thus, as
a Morgan banker noted, “Financial models predict until they don’t.” If the
error-correcting markets are barely mean reverting, that means all the precise
equations that comprise modern economics are normative, starting with the
assumption of a maximized self-interest. Perhaps qualitative methods also describing society are appropriate to the subject matter.
In the 6/19/15 NYT, Paul Krugman writes about economics itself:
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...we don’t know very much about how to raise the long-run rate of
economic growth. Economists do know how to promote recovery from temporary
slumps, even if politicians usually refuse to take their advice. But once the
economy is near full employment, further growth depends on raising output per
worker. And while there are things that might help make that happen, the
truth is that nobody (our note: except experimental entrepreneurs on a mission to do
things better and change the world) knows how to conjure up rapid
productivity gains. 3
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The short-term economic equilibrium that markets grope for is continuously
being upset by technological progress, substantial events and above all
changing consumer tastes. This means that any kind of optimized economic
production, management system, or financial portfolio will continually be
thrown out of optimality. Under these circumstances, producers will seek not
only lower costs, but also the flexibility to adapt to Mr. Market.
To cite three examples where automation is changing the
workplace:
Italy
Globalization has decimated northeast Italy’s
industries. Since the beginning of the global economic crisis, nearly 17% of
the industrial workforce, or 135,000 people, have lost their jobs. A manufacturer of automobile prototypes said,
“We needed…to use…the same skills, the same space, the existing investments,
but for a new business.” 4 Using 3D printing, the company developed
a series of designer lamps and customized sunglasses. “These technologies
inject the elements of the digital economy into the physical world, allowing a
galaxy of small companies to compete with multinationals....The advent of rapid
prototyping and other innovations means ‘you can compensate for your (cost)
disadvantage with variety, customization, and a rapid response to what the
market is demanding…” This requires a spirit of experimentation; but as a designer
said, “Even when you do something with new technology, you can’t forget the
aesthetics of the past”.
The U.S.
Technological developments in the U.S. might
constitute the greatest possible threat to its jobs. The questions are, “Will
technology, as it has in the past, enhance human capabilities?” or “Will
technology replace humans?” Perhaps the largest obvious threat to U.S. jobs
comes from cognitive computing in the service industries. In 2011, IBM’s Watson beat the human
competition in “Jeopardy.” Watson is now being trained as a cancer specialist
to find personalized treatments by comparing “disease and treatment histories,
genetic data, scans and symptoms against the vast universe of medical
knowledge.” 5 Formerly the
size of a room, Watson (its database undoubtedly specialized) is now the size
of three pizza boxes. Dr. Garcia-Manero,
a M.D. Anderson leukemia specialist said, “it isn’t so much that Watson is
wrong, but that it’s still learning….In the future, Watson ‘will be a fantastic
adjunct even for a master chess player….They keep telling me it will not
replace me; but I am pretty sure it will replace me.’”
Watson can be an expert when domain-specific knowledge is cumulative, and even expanding. But can Watson be an expert in markets; or to put it another way, life? In markets, timing matters (but is not all). Furthermore in economic markets, and of course in political markets, the freedom to explore new possibilities also matters. Unless society is conceived of as a disciplined factory, computer programmers will not be able to program in all contingencies; and even if a computer were programmed to somehow handle unforseen contingencies, it wouldn't be trustworthy. I would want a human to be responsible. In social science jargon, Watson has an omitted variables bias. 5a
Toyota Motor Corporation is the
largest manufacturer of automobiles in the world. A 7/15 Motor Trend article reports:
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(after the 2008 financial
collapse)…Toyota’s legendary just-in-time manufacturing process…roared out of
control amid the car market’s sudden gyrations. Like that, it transformed
from world-class industrial model to a monster they couldn’t throttle,
bleeding away a fortune as the months passed…Toyota…reimagin(ed) itself. From
retracing how it got here …to a fundamental rethink of vehicle line
architectures, its assembly lines - even the structures they’ll build them
in. …under the goofy slogan of “Building
Ever-Better Cars,” Toyota intends to go simple…All the key interior
components-steering wheels, shifters, pedals…will be dictated by standardized
seat heights. Select a seat height and the car’s mission (is it a sedan?) and
this leads of a highly pruned decision tree of accompanying components. (This
is an example of useful abstraction.) …they (then) explain the reimagined
factories that will build them. It skips from “Just in Time” to “Right Now”
with flexibility and responsiveness that’s simply dazzling....It’s
“One-by-One” production instead of usual production lots of, say, 50 cars of
a certain color. Moreover…(…almost all the machinery)
will be dramatically more compact, and combined with the elimination of
overhead conveyors, they allow Toyota’s future factories to be both smaller
and entirely single story…it also opens a bigger role for…old-fashioned
humans who can now walk around and get to everything….The revenge of the
human! It’s calculated that these Ever-Better-Plants will drop factory
investment by a whopping 40 percent. 6 |
With an exception we later mention, the
situation is still subject to specification. There then arises a question that
goes back to the ancient Greeks. Socrates asked, “How should one live?” 7
Socrates’ question is crucial because
the state of GNR technologies still gives people the power to use them to
achieve human goals. To cite an obvious example, future developments in
genetics will help cure more diseases or might make possible the dysfunctional
selection of genes that express only certain traits. The latter would
invalidate the key assumption of the democratic political system, that people
have an essential equality and value.
So returning to Socrates’ question,
the Greek answer was eudaimonia or
human flourishing, that involved mainly the individual: his talents, character
and work. (We think this is
the main reason why American movies are universally popular abroad. 8 ) Although there are clearly human costs, the
regulated market system fosters freedom and diversity. The overdevelopment of
GNR technologies threatens these.
Both the economic and political systems will
likely winnow out the ideas that compromise the values of U.S. society. But Bill Joy notes about GNR research, “The only realistic
alternative I see is relinquishment: to limit the development of the
technologies that are too dangerous, by limiting our pursuit of certain kinds
of knowledge.” 9
The former executive editor of the Harvard Business Review, Nicholas Carr writes, “To ensure society’s well-being in the future, we may need to place limits on automation. We may have to shift our view of progress, putting the emphasis on social and personal flourishing rather than (our note: some) technological advancement. We may even have to entertain an idea that is sure to be unthinkable, at least in business circles, giving people precedence over machines." 10
The above
suggests a set of social possibilities driven by technology. Societies provide the contexts in which technology operates; as people exercise their self-interests, properly understood.