Machines Are Killing The Middle Class

For the past 60 years, the American economy has been growing steadily. We know this mostly due to four important economic indicators:

  • GDP: the value of all the stuff a country produces
  • Productivity: how efficiently that country produces its stuff
  • Private employment: how many people are employed by businesses which add to the GDP
  • Median household income: how much money each family makes

During the first half of those 60 years, from about 1950 to 1980, all four indicators rose together.  Which makes sense: people have jobs, they do good work, they make a lot of stuff, and their salaries go up. But in the 1980s, median household income started to lose steam. People still had jobs, lots of stuff was still being made, and it was made efficiently, but salaries started to stagnate. In the 2000s, private employment started falling behind also. You’d expect that less people, working for less money would create less things less efficiently, but in reality, the GDP and productivity levels kept going up as if nothing had happened.

 

One of the authors of Race Against The Machine, an MIT scientist named Andrew McAfee, has an intriguing post on his blog about this trend, which he calls the “The Great Decoupling of the US Economy” — the observation that employment and income have become unhinged from the well-being of the economy. Why the GDP barely blinked while unemployment has shot up and wages have gone down, is partly due to tax changes and globalization — but also due to automation. Machines have been stealing jobs for decades, though until recently, they’ve been low-skill jobs that could be easily automated. Employees that lost those jobs were retrained and became supervisors of the machines, and their income even went up.

But now, machines have crossed another threshold and have begun taking high-skill, high-wage jobs: secretaries, travel agents, accountants, paralegals, researchers, translators, etc. And, as we’ve seen before, even better artificial intelligence is knocking on our door: soon, systems like IBM’s Watson will begin doing the work of doctors, lawyers and clerks. But, they won’t, and don’t, do it for their own sake: they do it at the behest of wealthy industrialists, who find it cheaper to buy a machine than to hire an employee. He still gets the same output from either the machine or the person, but at a cheaper price. And so the profits still roll in, while the value of the human worker is diminished, since there is now competition from a cheap robot.

As cheap technology takes over the skilled labor on which the middle class is based, that middle class will start to disappear. The social makeup of the year 2100 could very well reflect that of the year 1800: a small aristocratic class which controls almost all wealth, and an impoverished working class which does whatever it can to get by — nevermind live comfortably. In such a world, most employment would be in the service industry, with smaller numbers in the arts.

Dinner at Downton Abbey

 

We would effectively live in Downton Abbey, a castle in which there is no actual need for as many employees as it has: a cook and a maid would serve just fine. In fact, the castle itself is much, much too big for a family of six. But rather than live with scores of unemployed beggars, the aristocracy created jobs out of thin air by means of useless, elaborate rituals: extravagant dinners which require multiple cooks and multiple servants; needlessly complicated fashions which require maintenance by valets and maids; and management to keep these employees organized and “productive”. Besides these human roles around the mansion, our 22nd century aristocracy would likely also demand human service when going out, of course: waiters, clerks, salespersons. Besides service jobs, the only other employment that will never be replaced by machines are artists: writers, painters, sculptors, filmmakers — that industry is likely to see little change through the robotic revolution, since their products are subjective.

For the past 150 years, since steam-powered machines started replacing human labor, new inventions and new industries have always saved the day by bringing ever more need for skilled labor. However, as machines replicate more and more of our versatility, intelligence and skill, that road is coming to an end. And so, we need to start the discussion on the end of employment as we know it, and what humanity’s role will be in a world in which very few humans are needed to make the goods and services they use.

See also:

Via Andrew McAfee and Slashdot

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