Tag Archives: edward alden

Do We Face a Jobless Future?

In Amazon’s warehouses, there is a beehive of activity, and robots are increasingly doing more of the work. In less than five years, they will load self-driving trucks that transport goods to local distribution centers where drones will make last-mile deliveries.

Soon afterward, autonomous cars will begin to take the wheel from taxi drivers; artificial intelligence will exceed the ability of human doctors to understand complex medical data; industrial robots will do manufacturing; and supermarkets won’t need human cashiers.

The majority of jobs that require human labor and intellectual capability are likely to disappear over the next decade and a half. There will be many jobs created, but not for the people who have lost them — because they do not have those skills. And this will lead to major social disruption unless we develop sound policies to ease the transition.

See also: May the Forms Be With You!  

The industry behind these advances — and reaping huge financial rewards from them — has been in denial. Tech entrepreneur Marc Andreessen, for example, calls the jobless future “a Luddite fallacy”; he insists that people will be re-employed.

But now others, including Facebook’s Mark Zuckerberg, Tesla’s Elon Musk and Bill Gates, are acknowledging a skills mismatch, with the potential for mass unemployment. They advocate a universal basic income (UBI), a payment by the government that provides for the basic wants and needs of the population.

[Mark Zuckerberg tells Harvard grads that automation will take jobs, and it’s up to millennials to create more]

But these tech moguls are simply kicking the can down the road and shifting responsibility to Washington. UBI will not solve the social problems that come from loss of people’s purpose in life and of their social stature and identity — which jobs provide.  And the politicians in Washington who are working to curtail basic benefits such as healthcare and food stamps plainly won’t consider the value of spending trillions on a new social-welfare scheme.

In a paper titled “A New Deal for the Twenty-First Century,” Edward Alden and Bob Litan, of the Council on Foreign Relations, propose solutions for retraining the workforce. They believe that there will be many jobs created in technology and in caring for the elderly — because Western populations are aging.

The authors say that young people starting careers should be equipped with the education and skills needed to adapt to career changes and that older workers who become displaced should receive assistance in finding new jobs and retraining for new careers. Government shouldn’t provide the jobs or training but should, the authors say, offer tax incentives and insurance, facilitate job mobility and reform occupational licensing. To encourage employees to gain new skills, there should be “career loan accounts” from which they can fund their own education — with repayment being linked to future earnings.

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To minimize the effect of wage cuts resulting from changing professions, Alden and Litan advocate a generous wage-insurance scheme that tops up earnings; enhancements to the Earned Income Tax Credit; direct wage subsidies; and minimum wage increments. They believe, too, that a voluntary military and civilian national service program for young people would help alleviate the social disruption and teach important new skills and provide tutoring to disadvantaged students, help for the elderly and improvements of public spaces such as parks and playgrounds.

These ideas are a good start, but the focus was on maintaining a balance between Republicans and Democrats, on being politically palatable. The coming disruptions are likely be so cataclysmic that we need to go beyond politics.

See also: Outlook for Taxation in Insurance  

We have already seen the increasing anger of the electorate from both the right and the left in the U.S. elections. We are witnessing the same in Europe now. As technology advances and changes everything about the way we live and work, this will get much worse. We must understand the human issues — the trauma and suffering of affected people — and work to minimize the impacts.

As Harvard Law School’s Labor and Worklife Program Executive Director Sharon Block said to me in an email: “I don’t think we can be limited in our thinking by what can get through Congress now — nothing can. We need to be using this time to come up with the big new ideas to develop a bolder progressive vision for the future — and then work to create the conditions necessary to implement that vision.” The problem here is that with this future fast approaching, not even the inventors of the technologies have a real answer. This is why there is an urgent need to bring policymakers, academics and business leaders together to brainstorm on solutions and to do grand, global experiments.

The Dark Side of Rapid Change

Global trade and investment have been great engines of progress for much of the world. Over the past two decades, poorer countries reduced the gap between themselves and their richer counterparts for the first time since the Industrial Revolution, in no small part because of the opportunities opened by global trade. Technology has the same transformative potential in industries as varied as energy, health care, transportation and education. Inventions that are imminent or already here could transform the lives of billions of people for the better.

Yet, as we see in the 2016 U.S. election campaign, and as we have seen in Europe and elsewhere, rapid change has a dark side. If too many people are unable to adapt quickly and successfully to these changes, they will push back – blaming trade or immigrants or the elites – and demand a reversion to a simpler time.

The task of governments is to help people manage these transformations so that they benefit many and do as little harm as possible. In the U.S., governments mostly failed at that task during the era of globalization; if the full benefits of the coming technologies are to be enjoyed, governments will have to do much better this time around.

See also: ‘Interactive Finance’: Meshing with Google  

The competitive pressures created by globalization should have been no surprise. About 45 years ago, President Richard Nixon’s top international economic adviser, Pete Peterson, warned him that rising competition from Japan and Germany, with much more on the way, “poses adjustment policy which simply cannot be ignored.”

Americans have unquestionably gained by the lower prices and higher quality that import competition enabled. Apple iPhones and the latest Boeing jets are the result of the collective input of tens of thousands of collaborators in dozens of countries around the world. But many lost well-paid manufacturing jobs to import competition or outsourcing, and the U.S. government has made little effort to mitigate those costs, even in worker retraining.

President John F. Kennedy promised in 1962 that the government would help American workers who lost out to trade competition as the U.S. lowered its barriers to imports. “When considerations of national policy make it desirable to avoid higher tariffs, those injured by the competition should not be required to bear the full brunt of the impact,” he said. But today, the U.S. spends a smaller proportion of its wealth on worker retraining than any of the other 34 member countries of the Organization for Economic Co-operation and Development except for Mexico and Chile.

Too often, the attitude of the U.S. government has been deeply irresponsible, assuming that markets would simply sort everything out for the best. In the long run, everybody may end up with work and income, but, in the short run, as Peterson told Nixon, the failure to help Americans adapt to the new reality will “leave long periods when the transition is painful beyond endurance.”

With technology change, too, we know well in advance exactly what is coming. Driverless technology, for example, will soon become the standard in the trucking industry. Driverless trucks can run 24 hours a day and won’t demand overtime pay. There are 3.5 million truck drivers in the U.S., and an additional 5.5 million jobs in related industries – roughly one in every 15 American workers. They could perhaps go to work for UPS or deliver pizzas, but many of those delivery jobs will be lost to drones.

Personal-care robots will increasingly replace home healthcare aides, and self-checkout machines are already replacing retail-store clerks; these are jobs that filled some of the gap left by the disappearance of manufacturing jobs to global competition, but they, too, will soon be under siege. Automation is even hitting law and education, two sectors long thought immune to technological substitution.

See also: How Technology Breaks Down Silos  

These vulnerabilities necessitate something that too often was absent in the era of globalization: good public policies. Artificial intelligence will transform teaching, for example, but, without access to the highest-speed broadband, students in poor and rural areas will fall further behind their urban counterparts. And unless we strengthen social safety nets and retraining schemes, there will be far too many losers in the labor market. There is no way to avoid the huge impact that technology will have on employment; we have to prepare for it and help those whose skills it antiquates.

Much more even than globalization, technology is going to create upheaval and destroy industries and jobs. This can be for the better, helping us create more interesting jobs or freeing up time for leisure and artistic pursuits. But unless we find ways to share the prosperity and help Americans adapt to the coming changes, many could be left worse off than they are. And, as we have seen this year, that is a recipe for an angry backlash—and political upheaval.

This article was written with Edward Alden.