PBS: Will Machines Make Human Workers Obsolete? (Ray Kurzweil weighs in)

by econfuture

PBS News Hour recently had a special on the main topic I’ve been focusing on here: unemployment and inequality caused by technology, and in particular, automation.  You can watch the video below.

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At around 05:40, Ray Kurzweil makes a brief appearance. He is asked about the possibility of a “digital divide” — meaning that only a small percentage of the population is able to take advantage of new technologies, even as traditional employment opportunities are destroyed.  Kurzweil seems to argue that we won’t have a problem because these new technologies will be affordable and widely available (he gives the example of cell phones). A little later in the video, Peter Diamandis, the chairman of Singularity University, makes essentially the same point.

These views strike me as both unrealistic and elitist. There is little evidence to suggest that most average people are going to be able to parlay access to a cell phone, social media, or other personal technologies into a livable income. Even among the minority of people who actually have the necessary skills and training, there is a strong element of luck associated with the success of any entrepreneurial activity. Most new businesses of any type fail. Assuming that a huge percentage (perhaps most) of the population will someday generate a meaningful income by independently leveraging technology is really quite a stretch.

A second problem with techno-optimists like Kurzweil and Diamandis is their near exclusive focus on the cost side of technology. Many technologists believe that advancing technology and increased automation are likely to drive down costs and possibly make most products and services far more affordable.  At the extreme, some techno-optimists believe in the promise of a “post scarcity” economy.  Even if we go along with that — and there are certainly powerful opposing arguments based on energy and resource depletion and environmental degradation — simply making “stuff” cheaper is not an adequate solution.

Imagine for a moment that you were living in the year 1900. Suppose you could look through a time portal and see the world of 2012. You might well suppose that a “post scarcity” world had already been realized given the far higher living standards that average people now enjoy. On the other hand, if you got a look at 2012 prices (as opposed to what you were used to in 1900) you certainly wouldn’t feel that things had become more affordable!

The reality, of course, is that prices have increased dramatically in nominal terms since 1900 — but average incomes have increased even more. The average U.S. worker in 1900 earned just $438 per year.  Over the past 112 years, incomes have increased dramatically in real terms (after adjusting for inflation), leaving nearly everyone better off, even as prices have increased.

The problem is that if, rather than a period of 112 years, we look at just the last 30 years — say since the mid 1980s — the story is very different.  Incomes (wages) for most average workers have been completely stagnant in real terms; after adjusting for inflation, most workers have made little or any progress. And for a number of big ticket items — like health care, housing and education — the situation has actually worsened significantly for most Americans.

So will making all kinds of stuff cheaper, even as incomes continue to stagnate and even fall, solve our problems? No, it will not. If we actually had a situation where prices for nearly everything fell while wages likewise fell and unemployment increased, that would be deflation. You won’t find many economists who would advocate long-term deflation as a good strategy for the future.

Deflation destroys the incentive to invest in the future, and if prolonged, would likely slow the pace of innovation. The problem with deflation is that while incomes, prices and asset values may well fall, debts do not deflate. The result would be widespread insolvency, potentially catastrophic financial crises, and lower living standards for virtually everyone.

The true challenge we face in the  future is really about incomes. As technology and globalization advance, how do we get incomes for the majority of the population to continue increasing in real terms?  This has been the historical path to prosperity, and we have to figure out how to maintain that trend going forward. One of the main ideas I focus on in my book The Lights in the Tunnel is that incomes power consumers — and consumers ultimately power the economy.

If we can’t find a way to maintain, and even increase, real incomes for the majority of our population, broad-based prosperity will become increasingly elusive.

See Also:

Technology, Globalization, Consumer Spending and Purchasing Power

45 thoughts on “PBS: Will Machines Make Human Workers Obsolete? (Ray Kurzweil weighs in)”

  1. “Deflation destroys the incentive to invest in the future, and if prolonged, would likely slow the pace of innovation.”

    Deflation can be good if it is an outgrowth of productivity. In a simplistic view, the cost of a product can be broken down to R&D, Raw materials, and manufacturing/labor. In an increasing autonomous world, the cost of raw materials and manufacturing would be expected to fall, leaving higher profits to distribute/dedicate to R&D. I agree that in a purely competitive market, the price level could not be maintained and would have to fall as well, which would lead to lower profits for R&D. However, this is where intellectual property laws come into play. IP laws, such as patents, can create an artificial and anti-competitive (by design) price support that maintains an incentive to research and invest in the future.

    Reply

    1. wjtgpf, deflation is a continual fall in the general price level, not just a decrease in the price of one product, or a few of them. This can only happen if the inputs that are used in every industry fall in price. There are very few things that are used in every industry; by far the most important of these is labour.

      Deflation means continually decreasing the price of labour, which means continually falling incomes for the great majority of families.

      Knowing that cars (for example) will be cheaper next year, and cheaper again the year after that, would you buy a new car this year, or put it off as long as you can? Would you take out a loan to buy it, knowing that your income is going down so repaying the loan will take a bigger and bigger bite out of your paycheque? Only if you are forced to. Would you attempt to save as much as you can, knowing that your money will be able to buy much more in future years, when your income will be lower? Yes.

      Now look from the production point of view. Companies see falling sales and expect future sales to be lower still, despite their best marketing efforts. They will worry about going out of business, cut costs, and attempt to repay their own debt. They won’t invest in replacing existing plant, let alone in R&D.

      Ultimately it’s as simple as this: if your household income is permanently falling, you only buy what you have to: housing, food, clothing, utilities. That doesn’t include things with significant IP content. When everyone’s income falls enough, nearly every company that doesn’t sell essentials will fold. The remainder will have no money for R&D.

      Reply

      1. I know that the price of my computer will fall about 30-50% in next 12 months. Why do I still buy it? Why shouldn’t I wait one more year, two more year, ….? Simple answer: I need it right now! In a deflation world, we only buy things that we really need right away. We won’t hoard real estate and other commodities because we know that their price will FALL, it’s good for economy and poor guys.

      2. good points. i did somewhat conflate macro deflation with individual pricing. The overall point I was trying to make is that we already have public policy tools to incentivize innovation and invention. We can argue over whether the patent laws as currently implemented are effective, especially in the area of software development, but the underlying public policy is sound.

  2. Guaranteed, basic, universal income.

    If the myopic among the elites will not yield, they will be replaced one way or another.

    Reply

    1. Zdlax, most developed countries already have a early version of that, it is called welfare. Also expect any government that provides you any more guaranteed universal income to eventually control your life, how many children you can have (no one is going to keep paying you to have children who will also just want free money) and how long you can live. You will not be able to defend yourself against such a powerful government.

      “A government big enough to give you everything you want is a government big enough to take from you everything you have”

      Reply

      1. I don’t agree with the idea that necessarily government that provides for the welfare of its citizens must also exert onerous control on the lives of its citizens. What do you base this idea on?

        The fact is that our individual welfare is not something we achieve on our own but is something we always achieve through societal interaction. Do you think that interaction with large corporations somehow is “freedom” but interaction with government is “slavery”? Our lives in our supposedly free society already are significantly controlled by large corporations.

      2. welfare is not the same as a basic income. Welfare is need based, whereas a basic income is typically paid to an entire class of individuals regardless of need. In the US, the only thing close to a basic income is the Alaska oil dividend payments http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

        I have faith that the democratic process will prevent any totalitarian control over people’s lives. In fact, greater participation and popular input into the democratic process could result if people have more of their basic needs met.

  3. I remain somewhat of an optimist about the long-range prospects. The optimism is based on the belief that eventually society will adapt in some way that equitably distributes wealth. This may involve paying people not to work or to be life-long students and other such things that are against the American ethos.

    The alternatives to adaptation are either an increasing underemployed class that would likely lead at some point to civil unrest or a totalitarian regime perhaps arising in the wake of civil unrest. Ultimately these alternatives would not be satisfactory for the wealth or well-being of those who own the machines either. Unfortunately the alternatives may be explored by society before we reach the other side of this problem.

    Reply

    1. A totalitarian regime is not a requirement. All you need is strong property laws, strong policing, and a political system that can be sufficiently manipulated (read “The Dictator’s Handbook” for more details) so as to keep it all running.

      With weak AI, universal surveillance, respect for laws and an unfair political system, the US shouldn’t have any trouble absorbing mass unemployment. It won’t have to change its current, unequal wealth distribution system even a little.

      Food stamps and hand-me-down iPhones will be all the wealth distribution we need to keep things running smoothly.

      Reply

      1. In other words, what we have now.

        You might be right but I tend to think what we have now would have to change in some way if there was persistent, massive unemployment.

      2. I saw your recommendation of the Dictator’s Handbook below and downloaded the book. Great read. Thanks for the recommendation! I mostly agree with it.

        The economic and technological forces here can be compared to a tide while the strategies of rulers can compared to the navigation of boat that may choose to go with or against the tide. In other words, there are long-term, technological trends that affect the evolution of society even though human nature and the nature of rulers may stay the same.

        In terms of the book, the replacement of humans by machines will disassociate the production of wealth from human labor. An autocrat could perhaps maintain rule in this circumstance by only allowing the wealth from the machines to flow to a small group of supporters while the rest of society remains backward and without access to the bounty of the machines. It would be very analogous to how resource rich countries exploit their natural resources mostly with the aid of foreign companies and workers while the in-country profits flow to government bureaucrats and ministers. The solution, however, for a democrat (in the broad sense, not the political party) would have to be find a way to spread the wealth from the machines to a large number of people in society, which is more or less what I was suggesting in my original comment.

  4. I’m not that concerned with how this will resolve itself economically. It will be a bumpy ride for sure but sooner or later leaders will have to face a new reality.
    I’m more concerned about how to most people will have a meaningful life in such a new reality. Even in countries with generous welfare systems and having a job is not strictly necessary, being unemployed is for most people a very negative experience. Sure, there is more to life than work but I think many people will feel a void without it.

    Reply

    1. …”meaningful life…”
      With unemployment usually comes depression and a sense of failure. That’s why it’s critical that our “leadership” gets on the ball and comes up with a transitory plan for our society. I also agree with another poster who suggested education as an alternative to work.

      Reply

    1. The trouble is, it will be the people in power who determine how society is to be organized. So long as money is a source of power (ie forever), then socialism will only be possible through force. And make no mistake, what you’re advocating is socialism.

      The Dictator’s Handbook remains one of the best books I’ve ever read about politics, and it shows just how non-democratic a supposed democracy can be. The rich will provide the poor with enough to prevent a human rights catastrophe and no more.

      Still, if you advocate shrinking the economy for environmental reasons then the destruction of the working class will achieve that quite nicely. The rich can only consume so much.

      Reply

      1. appreciate your thoughts, John! is there a way, though, to move beyond “isms”? are there any signs of a “post-political” world coming? is there something other than “brute force” that could counter the power of money?

  6. How about a Hedonistic Techarchy? There’s no work, money, leaders or laws. The book Forever Pleasure a Utopian Novel describes how this kind of society might function.

    Reply

    1. thanks, Jarek! i’ve read a couple of reviews of this book. something similar probably indeed is going to happen as we merge with our machines: cell phone – smart phone – google “glass” – non-invasive internet-brain interface (helmet) – brain implant – all brains are hacked, “…and then the end will come”. to many though it still sounds like a science fiction. therefore, is there something we can return to? do we have any precedents in human history when there were no work (at least in today’s sense), money and government?

      Reply

      1. Serge N, good question. It seems nothing in our history could be like our future. We may be able to automate all work. And redesign everything from science and engineering. Like in the novel, their bodies and minds were redesigned. Do you think we’ll have the technology and science to improve our intelligence and emotions? Could this free us from crime, work and government, like in the book?

    2. Jarek, re: “Do you think we’ll have the technology and science to improve our intelligence and emotions? Could this free us from crime, work and government, like in the book?” – that’s what Kurzweil appears to suggest (except that he seems to prefer to stay away from more controversial topics like work and government). i would say yes, things appear to be heading in that direction. furthermore, it seems to me that at the end of that process it indeed will be literally “us” or “we” (not you and me and someone) 🙂 however, before that “end will come” many other things will happen that will be accompanied by instability and tribulation. some of those things are already happening in the shape and form of the so called “financial crisis” and that’s what the owner of this blog appears to be concerned about. from this perspective therefore, all the current “mainstream” discourse about economy, “austerity” in the midst of abundance, jobs and money appears to be behind the curve and might be even irrelevant already.

      re: “It seems nothing in our history could be like our future” – i agree. indeed, there is nothing in history that is exactly like future or even present time. that doesn’t mean though that there are no some similarities or analogies. consider middle ages when everything necessary for life was produced mostly withing a household. or, even further back to prehistoric times of tribes of hunters-gatherers when there were no work, money and government (in today’s sense at least). … fun stuff 🙂

      Reply

  7. Yeah, nice analysis, my thoughts exactly. Really the whole thing hinges on the one question that I don’t think was particularly well answered in The Dictator’s Handbook: what determines whether a country becomes democratic or autocratic.

    My thoughts are that it depends on the distribution of personality types within the population, ie the likelihood of the average person to be civic-minded, etc. But I’m not satisfied that anybody really has a strong model explaining this.

    But the concentration of power that a wealth-creation machine would create would set up powerful autocratic forces, and it would definitely take a strong counter-balancing force to maintain democracy.

    More likely, I think you’d end up in a situation where the state appears democratic, and certainly provides a high degree of public services, but remains quite autocratic. Think Brunei or Kuwait.

    Jim Cross :
    I saw your recommendation of the Dictator’s Handbook below and downloaded the book. Great read. Thanks for the recommendation! I mostly agree with it.
    The economic and technological forces here can be compared to a tide while the strategies of rulers can compared to the navigation of boat that may choose to go with or against the tide. In other words, there are long-term, technological trends that affect the evolution of society even though human nature and the nature of rulers may stay the same.
    In terms of the book, the replacement of humans by machines will disassociate the production of wealth from human labor. An autocrat could perhaps maintain rule in this circumstance by only allowing the wealth from the machines to flow to a small group of supporters while the rest of society remains backward and without access to the bounty of the machines. It would be very analogous to how resource rich countries exploit their natural resources mostly with the aid of foreign companies and workers while the in-country profits flow to government bureaucrats and ministers. The solution, however, for a democrat (in the broad sense, not the political party) would have to be find a way to spread the wealth from the machines to a large number of people in society, which is more or less what I was suggesting in my original comment.

    Reply

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    Reply

  20. It would be very analogous to how resource rich countries exploit their natural resources mostly with the aid of foreign companies and workers while the in-country profits flow to government bureaucrats and ministers.

    Reply

  21. be very analogous to how resource rich countries exploit their natural resources mostly with the aid of foreign companies and workers while the in-country profits flow to government bureaucrats and ministers

    Reply

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