Robert J. Gordon, an economist at Northwestern University has recently published an important new book, The Rise and Fall of American Growth, which argues that the U.S. has entered a new age of stagnation. Paul Krugman has a good review of the book here.
While Gordon’s argument is often characterized as being the opposite of the argument I have made in my two books about the impact of advancing automation technology on the job market (most recently, Rise of the Robots), there are many areas in which I think we would agree.
Gordon’s main point is that we no longer have the kind of robust, broad-based innovation that powered economic growth and rising living standards between roughly 1870 and 1970. Electricity, cars, planes, indoor plumbing and all the rest completely changed the quality of our lives during this period, and we haven’t seen anything comparable in the decades since. This is certainly true. However, I think it’s clear that innovation since then has continued (and even accelerated) but has focused largely in the information and communication technology arenas. This has not had the same impact on median incomes and living standards, and I think one important reason is that information technology is increasingly substituting for cognitive human labor.
There seems to be a fundamental assumption underlying Gordon’s analysis: IF ONLY we could once again have that broad-based, robust innovation, then nearly everyone would be better off, and we would again see real incomes for average workers once again rising (just like pre-1970). I think most economists would probably buy into this assumption.
I think that assumption is wrong. It’s wrong because information technology (and specifically artificial intelligence) is going to intertwine with any innovations that occur in the future and make everything less labor intensive. Unless we change our economic rules (perhaps with something like a guaranteed income), broad-based prosperity will remain elusive even if those robust innovations do eventually show up. The innovations may come, but the people at the top of the income distribution will continue to capture nearly all the gains.
The key insight is that those 1870-1970 innovations were all powerful job creators, and in the market economy jobs are the only mechanism that distributes income to the bulk of the population. (Think of the millions of solid middle class jobs created by the rise of the automotive industry—manufacturing, driving, repairing, fueling, insuring, and even washing, cars and trucks). The innovations of the future—regardless of how broad and disruptive they may be—are very unlikely to create that number of jobs, and the jobs that are created may well require skills and education beyond the capability of the average worker.
The chart below shows how compensation for average workers and productivity have decoupled since the mid-1970s. Suppose we suddenly have broad, 1900 to 1950-like innovation. Would that cause these two lines to converge? I doubt it.
I think that to some extent, Gordon may have missed the real story here. The most important insight is not that we no longer have broad-based innovation. It’s that innovation no longer guarantees broad-based prosperity. To solve that problem, I think we will ultimately have to change our economic rules.
I will be speaking about the rise of robots and artificial intelligence and the resulting impact on jobs and the economy at several events in September, including:
The Festival of Dangerous Ideas, Sydney Opera House, Sydney, Australia
There are many interesting speakers presenting provocative ideas, including Paul Krugman and Naomi Klein.
Industry of Things World, Berlin, Germany
This conference is focused on the “industrial internet of things.”
Kings Place, London, UK
This is a discussion about my book, The Rise of the Robots, which is releasing on the UK on September 3.
Institute for Public Policy Research (IPPR), London, UK
This is a discussion about my book, The Rise of the Robots, which is releasing on the UK on September 3.
I’ve just returned from a week-long book tour in China (my first visit) to promote the Chinese translation of my book Rise of the Robots. I spent most of the time in Beijing but also had one day in Shanghai.
I think that robotics and artificial intelligence are poised to eventually have a dramatic impact in China because of the country’s heavy reliance on manufacturing and also because China is faced with raising household incomes and transitioning to a consumer-driven economy at a time when information technology is far more advanced than was the case with countries like the U.S., Japan or South Korea. I wrote about these challenges recently in a New York Times op-ed.
During my trip, I spoke at three leading Chinese universities/business schools: Cheung Kong Graduate School of Business, Shanghai Jiao Tong University, and Peking University. Most of the people who attended the talks were alumni who had attended executive MBA-type programs. Shanghai Jiao Tong, for example, runs a program specifically geared toward training the children of Chinese tycoons in order to prepare them for eventual succession. In other words, it was a pretty elite audience. I also talked to a number of print, online and television journalists.
Here are some random observations from my trip:
There seems to a very high level of interest in robots, AI, and the potential impact on jobs and society. The journalists I talked to all came prepared with long lists of detailed questions and invariably utilized the entire allotted time period. My speaking events likewise generated far more questions than could be answered in the time available.
There’s a genuine concern about the specter of mass unemployment and what it would potentially mean for social order in China. I also got a lot of questions of about the “existential” threat of advanced AI – as has been articulated by Stephen Hawking, Elon Musk, etc.
There’s lots of entrepreneurial interest in robots. Several people in the audience said they had started robotics companies in areas like educational robots for children and telepresence robots designed to monitor the elderly. I also got several questions along the lines of, “I want to manufacture robots, can you recommend a U.S. robotics company to partner with?” (My answers disappointed in this area).
If you haven’t read Evan Osnos’s book Age of Ambition, I highly recommend it. I think it very well captures the mood in China.
One question from the audience in Shanghai—asked with genuine sincerity and enthusiasm—caused my mind to go blank for a while: “Since it looks like Donald Trump may be the next U.S. president, how will he be different from Obama? Do you think his strong business orientation will make a big difference?” My answer included the word “clown” but I’m not sure they really understood what I was saying.
One comment that I heard several times was that “If technology causes unemployment or social upheaval, that’s not our problem—it’s a problem for the government.” In other words, the Chinese government is clearly (and accurately) not perceived as being “by and for the people,” but rather something quite separate. However, people do have some level of confidence in government’s ability to solve problems.
Most Chinese continue to hold the U.S. in high regard and feel that their country lags significantly in terms of the kind of innovation you see in Silicon Valley. I pointed out that information technology diffuses pretty rapidly and that companies like Baidu are really on the leading edge in areas like deep learning. There’s a fair amount of concern about “reshoring” – or that robotic manufacturing will gravitate way from China and back to the U.S. (I think this will happen in some areas but probably not so much in electronics because the supply chain is so established in Asia; China may also benefit from its own reshoring effect as may be able to retain factories that would otherwise migrate to Southeast Asia).
Pollution is not quite as bad as I expected. It is very visible – look out your high rise hotel window in Beijing and you really can’t see very far. I would not call the sky really blue but on the better days it is perhaps “bluish”. However, I did not notice any issues with actually breathing the air. (Then, again, I didn’t go jogging either).
Everyone seems extraordinarily friendly. Beijing feels completely safe. At night, people gather in parks to play music and dance. On hot evenings elderly people sit outside and actually do use those fans you see in souvenir shops to cool themselves. Police are everywhere. They have no guns, but wear flashing blue and red led lights on their shoulders.
Public transportation is remarkably cheap. Subway fares were just recently revised to be based on distance, but I never paid more than 3 yuan (about 50 cents). Subways are extremely crowded, but there are way too many cars on the road and rush hour traffic crawls. Pedestrians are at high risk. When the “walk” light turns green and people begin crossing, drivers simply don’t care; they weave right between the pedestrians. Kind of the mirror image of Stockholm where everyone is so uptight about the rules that pedestrians will stand and wait obediently for the walk signal, even when the road is utterly barren of vehicles and there is not even the distant rumble of a running engine.
The Forbidden City is huge, but so crowded (and hot in July) that it really detracts from the experience. I much more enjoyed Jingshan Park, just to the north, where you can climb a hill (created from the earth excavated for the Forbidden City’s moat), visit a shrine with a panoramic view of both the palace complex and the city as a whole.
Toward the end of my visit I signed up for a VPN and used it successfully at one hotel. Then I moved to a different hotel, and when I connected, my entire internet connection when down almost immediately. From that point on, my laptop was unable to connect to the internet, even when not using a VPN—and even when I returned to the U.S. I was eventually able to solve the problem by reverting to a system restore point that was saved before I left for China. So if you plan to use a VPN in China, beware Big Brother behaving badly.
Here’s a list of some of the reviews/articles for my new book, Rise of the Robots:
Those are all pretty positive; here’s one that’s not:
Here is the book talk I gave at Seattle Town Hall:
And finally, my op-ed for the New York Times on what the rise of the robots may mean for China:
These are the events related to the release of my new book Rise of the Robots: Technology and the Threat of a Jobless Future that I have scheduled for May:
May 5 (Tues) – book release date
May 13 (Weds) 7:30 pm – The Book Smith, San Francisco, CA
May 14 (Thurs) 7:30 pm – Kepler’s Books, Menlo Park, CA
May 21 (Thurs) 7:30 pm – Seattle Town Hall, Seattle, WA
May 26 (Tues) 12:45 pm Governance of Emerging Technologies Conference, ASU, (conference registration required), Scottsdale, AZ
May 27 (Weds) 6:00 pm – Commonwealth Club, San Francisco, CA
My New Book “Rise of the Robots: Technology and the Threat of a Jobless Future” – releasing on May 5, 2015
My new book Rise of the Robots: Technology and the Threat of a Jobless Future will be available on May 5 in the U.S. (and via Amazon in many other countries) in hardcover, eBook and audio book. The publisher is Basic Books.
A Chinese translation will release simultaneously from CITIC publishing and a revised version, completely updated for the United Kingdom and with a slightly different title, will release in the UK in September.
Here is the Table of Contents:
Chapter 1 The Automation Wave 1
Chapter 2 Is This Time Different? 29
Chapter 3 Information Technology: An Unprecedented Force for Disruption 63
Chapter 4 White-Collar Jobs at Risk 83
Chapter 5 Transforming Higher Education 129
Chapter 6 The Health Care Challenge 145
Chapter 7 Technologies and Industries of the Future 175
Chapter 8 Consumers, Limits to Growth . . . and Crisis? 193
Chapter 9 Super-Intelligence and the Singularity 229
Chapter 10 Toward a New Economic Paradigm 249
And here are some comments by a few notable early reviewers:
“Martin Ford’s Rise of the Robots is a very important, timely, and well-informed book. Smart machines, artificial intelligence, nanotechnology, and the “Internet of things” are transforming every sector of the economy. Machines can outperform workers in a rapidly widening arc of activities. Will smart machines lead to a world of plenty, leisure, health care, and education for all; or to a world of inequality, mass unemployment, and a war between the haves and have-nots, and between the machines and the workers left behind? Ford doesn’t claim to have all of the answers, but he asks the right questions and offers a highly informed and panoramic view of the debate. This is an excellent book that offers us a sophisticated glimpse into our possible futures.”
—Jeffrey D. Sachs, Director of the Earth Institute, Columbia University and author of The Age of Sustainable Development
“It’s not easy to accept, but it’s true. Education and hard work will no longer guarantee success for huge numbers of people as technology advances. The time for denial is over. Now it’s time to consider solutions and there are very few proposals on the table. Rise of the Robots presents one idea, the basic income model, with clarity and force. No one who cares about the future of human dignity can afford to skip this book.”
—Jaron Lanier, author of You Are Not a Gadget and Who Owns the Future?
“Martin Ford has thrust himself into the center of the debate over AI, big data, and the future of the economy with a shrewd look at the forces shaping our lives and work. As an entrepreneur pioneering many of the trends he uncovers, he speaks with special credibility, insight, and verve. Business people, policy makers, and professionals of all sorts should read this book right away—before the ‘bots steal their jobs. Ford gives us a roadmap to the future.”
—Kenneth Cukier, Data Editor for the Economist and co-author of Big Data: A Revolution That Will Transform How We Live, Work, and Think
“Ever since the Luddites, pessimists have believed that technology would destroy jobs. So far they have been wrong. Martin Ford shows with great clarity why today’s automated technology will be much more destructive of jobs than previous technological innovation. This is a book that everyone concerned with the future of work must read.”
—Lord Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick, co-author of How Much Is Enough?: Money and the Good Life, and author of the three-volume biography of John Maynard Keynes
“If the robots are coming for my job (too), then Martin Ford is the person I want on my side, not to fend them off but to construct a better world where we can all—humans and our machines—live more prosperously together. Rise of the Robots goes far beyond the usual fear-mongering punditry to suggest an action plan for a better future.”
—Cathy N. Davidson, Distinguished Professor and Director, The Futures Initiative, The Graduate Center, CUNY and author of Now You See It: How the Brain Science of Attention Will Transform the Way We Live, Work, and Learn
My 2009 book The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future is now available in Japanese. You can order from Amazon.co.jp here.
The book was translated by the Japanese Publisher, Asahi Shimbun Publications. According to Google Translate, the cover text says something like “Technology will steal 75% of employment” … which sounds pretty alarming.
That 75% figure actually comes from chapter 4 of the book, where I say this:
In this chapter, we are going to fast forward far into the future; we will imagine a time when at least three quarters of the jobs which exist in our current economy have been permanently automated away. In other words, the unemployment rate will be at least 75 percent—an almost unimaginably high level—and there will be no realistic hope that more jobs will be created in the future. Is it possible to have a prosperous economy and a civil society in such a scenario?
If we can devise a system that would work in such an admittedly extreme situation, then we should also be able to figure out a way to gradually transition into that new system, so that we can maintain economic stability as automation advances in the coming years and decades.
Now, I thought it was pretty clear that I was constructing a thought experiment there. In other words, imagine a really extreme, far future, situation and then lets talk about what we might do in terms of policies to adapt the economy. I wasn’t actually predicting 75% unemployment. However, a number of people seem to have taken it that way. There were also a few articles in the press citing the 75% figure. And, now, there it is on the cover of the Japanese edition. My guess is that a lot of very bad things would happen socially and politically before we would ever see 75% unemployment in the real world. But if it helps sell books…
When I wrote The Lights in the Tunnel, I thought the title — which refers to a thought experiment I utilize in the book — would be catchy and memorable. In retrospect, however, it doesn’t do such a great job of conveying what the book is really about, and, especially, doesn’t translate well into other languages. I have learned from this, and my new book (releasing May 5) is titled Rise of the Robots.