David Barnhizer and Daniel Barnhizer
Our “bottom line” in The Artificial Intelligence Contagion: Can Democracy Withstand the Imminent Transformation in Work, Wealth and the Social Order? is simple. It is that if we do not get a handle on the processes of change and make strong, fast and accurate decisions that at least slow down the transformation, Western society as we know it is going to collapse into a struggling, authoritarian, dangerous and rancorous set of divided pieces. “Doom and gloom”, yes. A warning about the “Coming Apocalypse”, absolutely. But the signs are “on the wall” and we ignore them at our peril.
Vivek Wadhwa, a Professor at Carnegie-Mellon University, set out a vital concern in a 2016 presentation at the World Economic Forum in Davos. Wadhwa warned about the significant risk that the rapid technological shifts pose for income inequality.
[R]apid, ubiquitous change has … a dark side. Jobs as we know them will disappear. … The ugly state of politics in the United States and Britain illustrates the impact of income inequality and the widening technological divide. More and more people are being left behind and are protesting in every way they can. Technologies such as social media are being used to fan the flames and to exploit ignorance and bias. The situation will get only worse – unless we find ways to share the prosperity we are creating.
The ability to share in the financial benefits derived from the increasing use of AI/robotics systems that reduce the costs of human labor in production and services dramatically while wiping out extremely large numbers of human jobs is only part of the challenge. The issue is not simply economics and finance although those are critical. Even if we can somehow generate the kinds of revenues needed to support populations where fifty percent or more of the people capable of working rarely or ever actually work, how will we fill the vacuums of purposelessness and meaninglessness that will result?
A 2013 study by Oxford university economists Carl Frey and Michael Osborne put probable US job loss by 2030 at 47 percent. Others since that point paint a picture that is as bad or worse. No society is equipped to deal with such an economic nightmare, particularly extraordinarily complex systems such as in the US and EU with numerous expensive subsidy and safety net promises and obligations that cannot be met if predictions such as those of Frey and Osborne are correct. The changes are occurring rapidly and the scale and diversity of the AI/robotics breakthroughs and applications are astonishing. A study by the management company McKinsey announced that 800 million jobs worldwide could be lost over the next 13 years across a wide variety of occupations.
At the center of our dilemma is that AI/robotics is leading to the permanent elimination of a significant amount of human work. The resulting “exile” of much of the human workforce will, as Yuval Noah Harari, author of Homo Deus, indicates, result in the creation of a class of “useless” citizens in developed nations. This will disrupt the ability of Western nations to function as anything even approximating intelligent democracies and will continue our free fall into a state of fractured identity groups fighting each other over governmental scraps like dogs over a bone.
Billionaire entrepreneur Warren Buffett voices much the same concern as Harari, emphasizing that AI/robotics will make many of today’s workers economic “roadkill” as human employment dries up. One result of this job loss, joined with the large-scale transformation of our society to one heavily skewed toward the upper end of age demographics as is occurring in the EU, US, Japan and China. This shift has been called the “Age Curse”, and is a thread running throughout the analysis offered in Contagion. The demographic transformation it represents is creating societies in which the needs of older and less healthy populations in Western Europe, the US and UK, Japan and China will overwhelm the financial ability of governments to support their citizens in need.
Generalized Predictions of Job Loss
Predictions of job loss to AI/robotics range across a wide spectrum but even if only “mostly” correct they all pose serious concerns for human societies. Taken together with other negative challenges such as the rapid and distorted age demographics of all developed economies, the large scale debt loads that have been incurred by governments, corporations and consumers, youth unemployment, authoritarian governments and vastly expanded surveillance activities, the disappearance of human work presents fundamental challenges to Western societies. Some analysts are warning that the penetration of AI/robotics systems into all levels of human activity—work and otherwise–will go far and deep. A small sampling of those predictions, all of which are discussed in Contagion in greater detail, includes the following:
- 50% of US jobs will disappear by 2030. [Fast Forward 2030: The Future of Work and the Workplace] or 50% of US jobs will be gone by 2025. [2 Billion Jobs to Disappear (Globally) by 2030].
- 5,000,000 US manufacturing jobs have already been lost since 2000.
- 12,000,000 US jobs will disappear by 2026. [Robots Set to Disrupt White-Collar Work, 2016].
- 500 million jobs in the world’s 25 richest economies will be lost to AI/robotics.
- 50 percent of today’s work activities will be automated by 2050—give or take 20 years. Robots will take over most of the world’s jobs by 2045.
- 4.1 million US driver compensated jobs (taxis, semi-trucks, delivery vehicles, busses) will be lost to self-driving vehicles.
- Imposing a $15 minimum hourly wage in the US could eliminate between three to five million jobs. [Earned Income Tax Credit Is Better Tool to Raise Income than $15 Minimum Wage, 2016].
- Youth unemployment is threatening the future of millions of young Europeans. Black males in US have an unemployment rate of 17.5% and Black teenagers an unemployment rate of 41%.
- The unemployment rate in the eurozone reached 10% in 2009, “and has been stuck in double digits ever since. On average, more than one out of five young people in the labour force are unemployed, but in the worst hit crisis countries, almost half of people looking for work can’t find jobs.” (From Nobel Laureate in Economics, Joseph Stiglitz).
- The McKinsey Global Institute has warned that if the “slow growth” conditions of the past decade continue, up to 80 percent of people in developed economies could see flat or falling incomes. MIT researchers echo such concern in reporting a large-scale “hollowing out” of the US middle class is already occurring with many Americans sliding down the socio-economic ladder. While working hours are at an all-time high human productivity has declined and earnings are flat or falling for many workers even as the cost of goods and services continues to increase.
- Half of US households over the age of 55 have no retirement savings.
- The US, EU, China and Japan are experiencing a demographic “Age Curse”. By 2050, if current longevity trends continue, the US will have 1,000,000 people aged 100 years. Trends indicate that more than 50 percent of children born today have life expectancies beyond 100 years.
- While Social Security, Medicare and Medicaid are in serious financial trouble on the federal level, US state and local pension plans collectively have shortfalls in the trillions of dollars. They are unlikely to be able to meet those obligations.
- Significant numbers of large private companies have consistently underfunded their pension plans to the point of non-viability. As a number of those corporations declare bankruptcy due to economic conditions, they will shed those pension promises and leave their workers high-and-dry.
- The US is bankrupt. We are not only “between a fiscal rock and a hard place”– we are “being crushed beneath the rock”. David Walker, a former US Comptroller-General has warned that an honest analysis of the US national debt, including large scale off-budget borrowing, makes that debt obligation closer to $65 trillion rather than the $18 trillion when he spoke in 2015 or the current official figure of slightly over $20 trillion. The debt is expected to be above $24 trillion in Fiscal 2020. Given that the US is adding between $1.2 and $1.5 trillion annually to its national debt when governmental borrowing beyond received revenues are factored in, there is no way it will ever be paid off.
- Laurence Kotlikoff, a Boston University economist, has testified to Congress that when you apply what he calls the “Infinite Horizon” fiscal gap methodology to US debt obligations that still growing figure is $220 trillion, or more than ten times what is officially stated. The Infinite Horizon budget gap approach takes into account all the already committed federal government financial obligations.
- The Congressional Budget Office (CBO) has warned repeatedly over the past several years that the US faces a serious fiscal crisis that will hit within the next decade if we do not make the hard decisions required to deal with our national debt. The CBO warns that failing to make needed decisions in the next few years risks our fundamental economic health.
People who admit that AI/robotics will change society dramatically often fall back on analyses like Joseph Schumpeter’s cycle of “Creative Destruction”, one about which Schumpeter himself later remarked that he wished he had said “transformation” rather than destruction. This stands for the idea that even though there will be serious problems for a time due to the technological disruptions that AI/robotics is bringing to us—once the “down time” has passed things will turn around and be even better than in the “golden age” Western societies have experienced since World War II. That is a comforting delusion. The “golden age” is ending and we face fundamental challenges for which there is no ready answer.
The AI/robotics-driven transformation we are experiencing is different. For as much as half the developed world’s population the Schumpeterian cycle of “creative destruction” and eventual economic and social “rebirth” will be short-circuited. This will occur because AI/robotics systems are being designed and are evolving in ways that mean they will fill many of the positions human workers would normally occupy in the “new and improved” system that emerges after the transformation. As we discuss in an upcoming blog post, human jobs up and down the entire spectrum of work, from manual labor to advanced categories, will either be eliminated or reduced in number to the point that there is a totally inadequate supply of positions available for human workers relative to the demand.
Consistent with the “short-circuiting” of the Schumpeterian cycle, in their 2013 study of the massive impacts of computerization on human jobs Frey and Osborne indicate that the AI/robotics technological shift is not like others we have experienced. Their fear is that unlike what has occurred in connection with other transformations of our economic system, there may not be a significant employment recovery on the other side of the downturn. They highlight this fact by observing:
This raises questions about: (a) the ability of human labour to win the race against technology by means of education; and (b) the potential extent of technological unemployment, as an increasing pace of technological progress will cause higher job turnover, resulting in a higher natural rate of unemployment.
An analysis by Joel Kotkin concludes:
“Past economic revolutions—from the steam engine to the jet engine and the internet—created in their wake a productivity revolution. To be sure, as brute force or slower technologies lost out, so did some companies and classes of people. But generally the economy got stronger and more productive. People got places sooner, information flows quickened, and new jobs were created, many of them paying middle-and working-class people a living wage. This is largely not the case today.”
The “Sky” Is Falling
What is occurring is not an imaginary apocalyptic scenario. Jamie Dimon, the head of JP Morgan Chase, who is not a “sky is falling” idiot, predicts there will be large-scale economic and employment problems within ten years. In that regard, Howard Schneider indicates that, as observed by the Atlanta Federal Reserve Bank’s President, we are facing something outside human experience. The result would be “a workforce based on large numbers of lower paid workers, with a few highly paid managers, professional and technology workers, and a permanent hollowing out of the middle class.” This was brought home to me while listening to my car radio. In an ad by a financial investment company the spokesperson proclaimed “you won’t have to rely on a person with us because we use algorithms to help you achieve better results.”
Relentless forces and technologies are pushing us in the “Non-Schumpeterian” direction of job destruction where we will not experience adequate new job creation for human workers. Even if people do not fully understand what is happening, events are creating a sense of uncertainty among investors and large companies. Uncertainty is an understandable state of mind in a situation where no one knows where things are heading, no one is in control, and the motivations and needs of the primary actors are in conflict.
The normally optimistic Jack Ma, who recently stepped down as CEO of the Chinese technological giant Alibaba, stated that Artificial Intelligence will cause people more pain over the coming decades rather than it will bring them happiness and a feeling of social and economic security. Ma warned:
“ ‘Social conflicts in the next three decades will have an impact on all sorts of industries and walks of life.’ Speaking at an entrepreneurship conference in China discussing the significant job disruptions that would be created by automation and the Internet, Ma added: ‘A key social conflict will be the rise of artificial intelligence and longer life expectancy, which will lead to an aging workforce fighting for fewer jobs.’ ”
Note that Ma described the challenges as taking place over the next three decades. Take a moment to think about the turmoil, social stresses, aggressive competition and hostility between and within nations as they try to deal with rising social and political conflict and costs. Ma could as well be describing a version of a new “Thirty Years War” of the kind that devastated Europe several centuries ago.
But we don’t even have to look out 30 years into the future. Given the radical and accelerating changes in employment projected to occur over slightly more than a single decade leading up to 2030, the effects on human societies will be as if the bottom fell out of the system of employment on which we depend for our livelihoods. We will be forced to rely on increased governmental expenditures at the time when in the US and China those nations’ budgets and economic activity have already been propped up by acquiring massive amounts of governmental and corporate debt, not to mention the more than $10 trillion in consumer debt owed by individuals.
The “Age Curse”
With the dramatically age-skewed population demographics in Japan and China, it is not surprising those nations are world leaders in developing robotic workers. For those nations it is a survival strategy. The US and Western Europe are facing the same dilemma with aging populations relative to those in their work forces although their problem is buffered to an extent by the entry of large numbers of migrants with higher birth rates. In some instances, however, the cultural and value differences of some elements flowing toward those developed nations along the migratory chain present striking challenges both for the new hosts and the new immigrants. Neither Japan nor China has been receptive to migrants and that dynamic is not going to change.
China is developing a robotic workforce that will send millions of humans to the employment sidelines not only in China but other countries as it slashes the costs of production, applies “stealth” subsidies and stimulates the exports on which that nation depends so heavily. China has also begun downsizing its human workforce in the steel and coal industries, embarking on a plan to cut 1.8 million workers. Foxconn has adopted robotics to the point that it was able to cut its workforce from 110,000 human workers down to 50,000.
China has plugged robotic workers into its automotive and electronics manufacturing processes to the point that it will have the largest number of robot workers of any country as of 2017. In a globalized economy, this means that while many of the displaced workers will be in China, others will be sidelined in other countries, including the US and Western Europe. This is because the Chinese costs of production will become even lower due to the efficiencies of AI/robotic systems and that China is committed to maintaining its trade advantages by various strategies including extensive subsidization and dumping below honest free market prices.
Japan needs robotic workers to deal with the demographic and health conditions that nation will be facing in its near future and this is driving Japan’s research activities. Japan’s 2016 birthrate fell below 1 million new births for the first time since record keeping began in the 1800s. It is also estimated that 20 percent of Japan’s population over the age of 65 will suffer from dementia by 2025. As if that doesn’t put enough pressure on an economic system that has struggled mightily over the past two decades, Japan’s population of individuals over 90 years of age has doubled from 1 million to 2 million in slightly over twenty years, imposing large financial health care and other support obligations for that group.
One “good” thing about having an older population with health care and assisted living needs is that caregiver jobs are created in large numbers to satisfy the demand for help. At least that has been the expectation. In both Japan and China, however, it is increasingly probable that robotic caregivers will be providing many of the services we thought would provide work for millions of people. Given the research that is going on in movement, humanlike skin, appearance, emotional simulation and other areas of research, such AI/robotics systems may unfortunately be able to provide better, safer, and seemingly more attentive and compassionate care to the elderly than they currently receive from many human workers.
As suggested in discussing Japanese robotics R&D in Contagion, there is ongoing experimentation with robots as caregivers for the elderly in assisted living facilities. This may initially seem farfetched, but if one has had to deal with a parent or grandparent in such facilities, even ones thought of as of higher quality, it is not that difficult to understand how with some further “tweaking” involving a robotic caregiver could be an upgrade to the quality of care received in many of the facilities.
Extensive research is going into how to make the robotic caregivers seem empathetic, communicative and caring as well as efficient. While some may sneer and argue that the robotic caregivers’ portrayal of compassion and caring might be phony, the reality is that the same conclusion can be voiced in relation to many human caregivers. This means that while there is and will continue to be an increasing number of elderly in need of care, and people are being told that this offers a safe and secure career path for future workers, many of the jobs may be filled by “Roberta the Robot” rather than a human worker.
All Kinds of AI/Robotics Systems Are Being Developed for All Kinds of Jobs
Technological breakthroughs are coming upon us with stunning speed. Companies such as Google are investing heavily into Artificial Intelligence research. A recent report indicated that Google’s researchers are intently focused on constructing Artificial Intelligence programs that will be capable of writing new programs without human involvement. This creates the very real possibility that there will be considerably less need or demand for human programmers and coders in the AI/robotic future than many are assuming in their belief that new types of jobs will emerge to replace those made obsolete by AI/robotics.
It is not solely an issue of the absolute number of new jobs that become available. A special combination of intellectual, visionary and technical skills are required for the evolving workplace and there will be far fewer people who possess the unique blend needed to excel. A New York Times analysis warns there is a shortage of humans capable of doing the kinds of AI development that companies need in their product development. It estimated that perhaps only 10,000 people in the entire world have the abilities required to perform on the sophisticated levels that will be required in the AI/robotics dimension.
Another part of the challenge of the “good” is that AI/robotics systems are already better than human workers in many areas of activity. As they are further developed, AI/robotics systems will be faster, stronger, cheaper, more efficient and reliable, provide less hassle for employers, and in far too many instances, do a better job than the human workers they replace. Faced with this fact, how can humans possibly argue against AI/robotics when such systems are better than us at a vast array of tasks? If they are better, don’t the AI/robotic systems deserve to come out ahead? Whatever the economic answer to this question might be, the political and social response must be a firm and resounding “NO!” because otherwise we are corrupting the essence of our society.
Fast Forward 2030: The Future of Work and the Workplace concludes:
Artificial intelligence will transform businesses and the work that people do. Process work, customer work and vast swathes of middle management will simply disappear.
[One key conclusion of the Fast Forward 2030 Report is that] Nearly 50 percent of occupations today will no longer exist in 2025. New jobs will require creative intelligence, social and emotional intelligence and ability to leverage artificial intelligence…. The next 15 years will see a revolution in how we work, and a corresponding revolution will necessarily take place on how we plan and think about workplaces.
One academic expert, an economics scholar at Dartmouth, summed it up as a situation where: “Whether you like it or not what the global economy is delivering is that the productivity growth that has been realized has been earned by a small fraction of highly skilled people and returns to capital.” While that “small fraction” of our workforce benefits to extraordinary degrees and the owners of capital even more, many others are being left out of the benefits of the economic developments and wealth creation produced by the AI/robotics phenomenon.
Although the 2013 landmark study by Carl Frey and Michael Osborne, The Future of Employment: How Susceptible are Jobs to Computerisation? focuses on the loss of repetitive low-skilled jobs, no area of work is sacrosanct. Work opportunities are being eliminated from the most “intellectual” activity down to the most basic areas of services and labor. Some analysts predict that fifty percent of jobs currently done by humans could disappear in the next ten years. One US-based study predicts the loss of 12,000,000 American jobs in less than ten years. Another projects a six percent permanent US job loss just within the next half-decade. That study also asserts:
Developments in robotics and technology mean more and more white collar jobs are being automated and performed by machines, according to experts, who also predict that this automation could solve the productivity gap. Estimates of the impact of robotic automation vary, but market research by Forrester forecasts that automation will replace 12 million jobs in the U.S. by 2025 … The jobs most likely to be disrupted by automation will be roles in customer service, office and administration.
It is not only elder care discussed above in the context of the Age Curse. In China and Japan robot servers and order takers are being developed that could replace millions of waiters, dishwashers, bus boys and cooks. Although those jobs may not provide lucrative compensation there are many people who may only be able to engage in that type of work activity. They could soon be discovering that much of what they could work at has disappeared. As we will discuss in a subsequent post, in the US we are also seeing robot fast food cooks, pizza makers, drone delivery systems that are replacing drivers, rapid development of autonomous self-driving cars, buses, delivery vehicles and even semi-trucks.
These technologies will replace millions of human workers whose capabilities, qualifications, interests and training don’t prepare them for doing much else. The result is that basic job categories we have been thinking are “safe” havens for human workers are under threat. This is an absolutely critical development because it means that there will be no jobs of the kind that tens of millions of people are capable of doing. Many of those people will be young or reside on the lower end of the socio-economic spectrum with limited education and few resources.
A report by researchers at the London Business School concludes there will be sweeping replacement of many human workers by robotic ones within the next twenty years. A summary indicates:
Lawyers, doctors and accountants may be redundant in 20 years after scientists have claimed their jobs will be taken over by robots. A study into the future of human employment has predicted a surge in machine-led work such as robotic counsellors, body part makers and virtual lawyers. … The worrying research suggests that humans will be replaced because robots are able to produce better results.
The problem is not only one of massive job loss with very large numbers of people permanently out of the workforce, but the effects of individuals growing “ultra-dependent” on governmental support. This is discussed at length in the “Solutions” part of Contagion in the context of what is being called Universal Basic Income or UBI. Along with these concerns comes the issue of identifying strategies that will allow us to obtain the revenues needed to support a massive non-working class and ultra-dependent groups who need and demand financial support. These groups will strive to seize the political power needed to ensure continuing benefits as they seek to protect or advance their interests.
One reason our analysis highlights the connection between AI/robotics and the “death” of democracy is that there is no reason to believe that democracies will be able to cope with the stresses, competition, social fragmentation, rage and violence that will occur as a result of intensified social struggles over scarce resources. It is not only a financial issue but includes the increasing lack of opportunity and social mobility, growth in real and perceived inequality accompanied by jealousy and resentment, the evaporation of a sense of community, and the loss of any sense of meaningful and coherent purpose other than the pursuit of the power necessary to advance one’s preferred identity group against competitors.
Though some philosophers have observed that the need to work is a “curse” that denies humans the opportunity to achieve full development of their talents, if we are honest about the behavior of the human race a more legitimate reality is that most people have little interest in the development of their highest “existential” being. We are in fragmented societies in which the dominant emphasis is a quest toward what Freudian analysts describe as the pursuit of pleasure and avoidance of pain. For many it is a shift from any sense of duty and community to a system of narcissistic entitlement or desperation in which the person expects to be taken care of by society.
Moshe Vardi, Professor of Computer Science at Rice University, delivered a talk to the American Association for the Advancement of Science exploring the critical question: “If machines are capable of doing almost any work humans can do, what will humans do?” Vardi is not alone in concluding half the world’s workers will be replaced by machines within the next 30 years. If anything close to that elimination of human jobs actually occurs it will wipe out jobs across a surprisingly wide spectrum and exacerbate income and wealth inequality.
Vardi also noted that robots would take over in many spheres of life, including automated driving and [even] sex robots. He observed that this future is likely to mean humans will have much more leisure time to the point we may only work a handful of hours per week. Just what millions upon millions of under-educated and drifting unemployed humans will do to fill in the hours, days and years of pointless existence is open to question, although we already have enough indicators in the form of rampant opioid addiction, alcohol dependency, widespread emotional depression, rising crime and violence to have a sense of what will occur.