By: Heero Yuy
Repost from WallStreetOasis.com! Enjoy!
Automation is a very controversial topic. So controversial in fact that one of my friends got pissed off when I got under his skin about it.
Martin Ford explained Automation to me in his book Lights in the Tunnel back when I was a grad student and his recent New York Times Best Seller Rise of the Robots: Technology and the Threat of a Jobless Future dives deeper into this very topic.
I’m all for automation. It makes our lives easier, more productive, and enjoyable at the cost of jobs. While we want to believe this is frictional unemployment and leave it at that I truly believe it is structural unemployment that has no easy solution. Why?
Two things must happen to a displaced worker in order to get ahead of the Automation curve:
- Out learn and pivot into the next best field
- Hope that field doesn’t get automated before they’ve extracted enough Capital from selling their services through employment or business venture
1 deals with a rates issue and time available to dedicate oneself to training in a new discipline. When good ole Peabody, the Coal mining company, went belly up last year a lot of the miners were interviewed as to what they would do next. Turns out they are going to grind it out intellectually and pivot to become programmers. Very awesome and this shows the true American spirit for those who’ve made that transition while others were left behind. Bills, your spouse, and kids don’t stop though when the individual is put out of the job so time available for this retraining process is a premium the further down the road of life you’ve traveled. Different story if you can ramen noodle sleep on couches as a single person.
2 Deals with picking the right field that has lower likelihood of being Automated out. No one really knows how to do this because the speed and acceleration of the growth of Automation is quite alarming. Go be a Dentist or a Doctor or something, who knows!
My friend’s counter-argument against Automation:
- The human “potential” is infinite, we will always outpace automation as we’ve done in the past
- People have been dealing with automation for centuries and we’ve thrived
- People can learn to adapt even when displaced from jobs
1 Potential doesn’t get you jobs when you put that on the headline of your resume.
2 Automation has actually crushed a lot of people in the form of outsourcing. Some have drawn ties to middle-aged White American Men suicide rates to the Increased Trade with China.
3 Open-ended statement. Can but don’t is also useless. It’s about learning rates and deadlines. Given infinite time, most of us can figure everything out. We don’t live forever.
My friend doesn’t understand the difference between velocity (speed) and acceleration. This is crucial for not only understanding Physics but also Market dynamics and other things like the Peak Oil Hypothesis (can’t drink fast enough of black gold on to keep up with consumption). He overcompensates by being emotional and repeating his statements many times until I sent him packing by telling him that he is a lazy student.
What threw my friend and others like him over the edge
Ask him to employ those people who’ve been displaced and who he would choose if he had the option of selecting an overly qualified candidate and one that is pivoting with the aptitude but not the experience for a job ceteris paribus (i.e. same pay, benefits, etc). No rational person would pick an unknown over those with heavier paper and real life credentials.
When challenged with a real life problem, these arm chair theory guys go running right back to their books, journals, and obscure publications for rebuttals.
Automation. Our best ally or most feared invention to date? WALL-E or Terminator? You decide.
Harvard Business Review: Beyond Automation
I Don’t Think we can Stop the Future of Automation and Job Losses – Martin Ford
Trade Liberalization and Mortality: Evidence from U.S. Counties – Federal Reserve
Lights in the Tunnel – Martin Ford
Rise of the Robots: Technology and the Threat of a Jobless Future – Martin Ford