The Rise of Automation

John Maynard Keynes, wrote an article in 1930 titled - Economic Possibilities for our Grandchildren where he takes “wings into the future.” What can we reasonably expect the level of our economic life to be a hundred years hence?  His basic premise is that productivity will continue to increase rendering more and more humans jobless.


2030 is more than a decade away and John Maynard's forecast is amazingly on target. Advances in automation, is affecting workers in developed countries and the impact is undeniable.

“Nonemployed - As robots grow smarter, American workers struggle to keep up”:


This trend will continue to pick up pace and in the future we will see more and more jobs being performed by robots. So what does the future hold? Watch this video on humans need not apply:


And the alarm it raised for the author of the following article:


Computers are becoming smarter and the implications are described in this talk:


The children of the 21st Century will have bigger challenges in bringing up their children, than the 20th Century generation. The world has changed so much since our parenting experience. While the pace of change is accelerating society's ability to keep pace with its impact is not.

Society will have problems coping with the rate of change being brought about by technological advances and innovation. The rate of change is accelerating and every indication is that the effect on mankind will be cataclysmic unless it is planned for.

The following is a Sixty Minutes feature: Are robots hurting job growth?


Here is an opinion piece on the same subject:


 Kurzeweil who is considered by some to be the world's leading artificial intelligence (AI) visionary coined the phrase "Singularity" to describe the moment in the future when machines and humans converge. He sees this happening by 2029.



Pundits are conflicted about this trend as portrayed in these TED talks:


Listen to the last 60 secs, of the opposing talk below, if you don't have the time. The title is half misleading. Innovation is not dead. Whether it will contribute to growth is the issue. Innovation will make things better for some and hurt others.


Notice the difference in age between the two speakers. Both agree on the rising income gap and the impact of automation. Education will be revolutionized by technology. This is not acknowledged by the second speaker. It will become more accessible. But, will people take advantage of it. What the US faces today and in the near future, the developing world will experience, not too far in the future. Innovation will continue, however currently, there is a diminishing rate of uplifting return due to innovation. More people are being rendered jobless due to automation. The first speaker acknowledges the challenges, and has a Utopian response; the second predicts society will be unable to cope and he challenges the current generation to deliver innovation that have the same uplifting impact as the past generations did.

 Jeremy Rifkin has coined the phrase, "Zero Marginal Cost Society", and written a book pointing out that the rapid advances in technology is "speeding us to an era of nearly free goods and services."


He explains the impact on society in a talk he gave at the Churchill Club:


None of these opinions delve into the massive socioeconomic-political changes that need to take place to address this trend.

Growing income inequality is a world wide phenomenon. For instance say one person makes 5,000 a month and another makes 10,000. Both get a 5% increase which takes their wages to 5,250 and 10,500 respectively. The income gap of 5,000 becomes 5,250. The wages for an unskilled or same skilled job is not going to keep pace with jobs that require special skills. It doesn't take a new set of skills to perform existing manual jobs like "load carrying", picking fruits and vegetables, etc.  Any wage increase is not because of upgraded skills. It will be paying more for people doing the same job,  to keep pace with inflation. The solution to the rising income gap is to reduce the cost to these people by way of subsidized housing, food, healthcare and education. Just about all countries provide these subsidies in some form or the other. The outlay for these “hand outs” is going to increase and needs to be planned for.

Developing countries face the problem of lack of opportunity for their citizens while developed countries are losing jobs to automation. Both are faced with people willing to work but lack opportunities. Furthermore, every country is faced with ‘Takers’ who are unproductive people, be it due to unavailability of opportunity, inability, age, or unwillingness to work.

With increasing automation, more and more jobs will be eliminated, which will increase the supply of workers and put a downward pressure on wages. There will be more and more people who are unable, or incapable and hence shut out from the "automated economy".

The short term solution to this problem is for the "productive" people the “Makers” to support the "unproductive" people the “Takers”. This is being practiced in some form or the other by every country.

Given the current socioeconomic-political situation this solution is not sustainable. We will be faced with a decreasing number of Makers that will have to support an increasing number of Takers.

The undeniable facts are:

Automation and design for manufacturing will become localized, but it will require fewer workers. The developing world will benefit and affected by this trend.

In the US the Middle Class that comprised mainly of Joe Plumber, Jack Electricians and Bob the construction man is being decimated. Wages are either stagnant or declining.

In the Developing World the opposite holds true, the Middle Class is growing and wages are improving for skilled, semi skilled and workers. But this “dividend” may be short lived. The rate at which technology is adopted by the Developing World is increasing as well. The downside of not increasing productivity is increased costs and reduced efficiency.

Barring a man or nature made catastrophe, we can see a new world order with the “USA 2100 - The Forthcoming Age of Leisure”, as described in the article of the same name.

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