Thursday, April 30, 2015

The Need to Put an End to the Republican Party's World View

The core economic values of the Republican party (lower taxes across the board, smaller government, and less regulation) flow from a rugged sense of self-reliance. Individuals should develop character, learn skills valued by the economy, and work hard developing businesses or working jobs all their adult lives.

This Republican world view fundamentally assumes that unemployment, low income, poverty, and failure to achieve a solid middle class income is the result of inadequate personal initiative, a failure of character, a lack of commitment to family and community. Teach children to fish and they can and should take care of themselves; feed them with a hand-out of fish, and they will be weak in their moral fiber and become reliant on hand-outs all their life. The problems we face are a lack of character and initiative, not a lack of opportunity.

This vision assumes a scarcity of labor in the economy. There may be temporary disruptions in the labor market--a temporary lack of alignment between labor force skills and the needs of the economy. Government may assist the labor force to re-tool with new skills, but this will always be very temporary and secondary to individual initiative. 

The problem with this Republican world view is not the value of self-reliance, or the emphasis on character and industry; the problem is we are living in an economy with a surplus of labor. There aren't enough good jobs to go around. It's not lack of initiative, it's a lack of opportunity. This has always been true in pockets and for periods at the local level: in blighted inner cities, in one industry towns when industry leaves, in industries disrupted by new technologies. 

The problem may be about to become global and permanent for the economy as a whole. A 2013 Oxford study concluded that 47% of U.S. jobs are threatened by technological automation. Consider, for example, that according to the Bureau of Labor Statistics in 2012 there were 233,000 taxi and chauffeur jobs in the U.S. What will happen to those jobs with the advent of driverless vehicles?

There have been Luddite Cassandras ever since the introduction of the power loom in the early 19th century. To date their concern has been mostly misplaced. The economy has managed to put technological productivity advances to good use and create new and better jobs to replace jobs lost. 

But this time may be different. Over the past 30 years middle-class manufacturing jobs have disappeared, in part due to outsourcing overseas, and in part due to technological advances. Machines are replacing human labor. Most jobs created of late have been in personal services and food services that require little education--but that computers cannot yet do. The concern of people who study such things is that "build good character and get an education" may not be a solution for a better paying job in future because there won't be enough such jobs to go around. 

Last Tuesday, Josh Barro of the New York Times moderated a discussion at the Milken Institute which focused on this question: Is technology destroying more jobs than it creates? If so, what will this mean for our economy, our society, and our political needs? 

I have embedded a video of the discussion below. Panelists are Brad DeLong (political economist at UC Berkeley), Jeremy Howard, CEO at Enlitic (a modern machine learning company focusing on healthcare), Amy Webb (a digital media futurist and founder of Webbmedia), and Gerald Huff (principal software engineer at Tesla Motors).  

Within the next 10-20 years, warns Amy Webb, huge swaths of jobs in banking and mortgage, telecom, legal services, journalism, customer service, transactional positions, factories, and marketing will disappear. 

Gerald Huff points out that of 535 major occupations in our economy today, most are not new. Eighty percent of jobs in today's economy existed in 1914--only 20 percent are new. However, 90 percent of the work force continues to be employed in jobs that existed in 1914.  Old Industry as Donald Rumsfeld might say. In other words, new jobs created did not pick up their share of the labor force. To the extent that a large number of traditional jobs are about to go away on account of the new technologies and automation, that's a problem. 

Gerald Huff also points out that of 23 million jobs created in the 20 year period 1993-2013, half of those positions came in food services, retail, health care, education, and people driving vehicles for a living. New industries like computers, internet, telecom, aerospace, scientific research and development account for only six percent of job growth over this time period. New industries we are inventing are not mass employers. They won't be able to pick up the slack of job losses due to automation in traditional areas--no matter how much we educate people, how industrious they are, or how good their character. 

STEM jobs (science, technology, engineering, math) or creative jobs will not be able to replace all the jobs we are about to lose to automation says Huff.  We currently have ~145 million jobs in our economy. If we count every computer job, scientific job, technician, mathematician, data scientist.... all of these STEM jobs account for only 8 percent of jobs. All of the "creative jobs" (photographers, musicians, artists, actors, writers, editors, dancers, media people, journalists, etc.) account for only one percent of jobs. The economy is simply not made up of STEM jobs or creative jobs.

Jeremy Webb says "don't look to healthcare for a solution." He is working on massively increasing productivity (and quality) of healthcare through machine learning and automation. Today, says Webb, machine learning systems are better than humans at seeing things and recognizing what they are. He  gave a TED talk last November where he said computers are now 10,000 faster and 10 times more accurate than humans. Today, he claims, this is 15X out of date: machine learning systems are another 15 times faster, more accurate, and require less power to operate than just five months ago! In healthcare, as well as in the economy as a whole, humans currently do the things that computers "can't do yet" because humans have perception, and computers don't have perception, because humans can read and computers can't read.  "But this is basically changed, or is now changing," agrees Webb. 

No matter how industrious our children will be, how good their education, or how good their character--there may not be enough jobs to go around in light of automation that is currently underway. 

"What do we do as a society," asks Gerald Huff, "if the demand for human labor begins to significantly fall off because of these new technologies?" 
That debate is about 15 to 20 years off ... but we need to start talking about it now, because it will require very radical rethinking about ... full employment,  about people surviving based on needing to have a job. And there are very interesting solutions that have been proposed to this problem, including one that has been endorsed left, right, and center, which is a basic income guarantee that gives everyone a foundation on which to build their lives, but that guarantees them an income that says they don't need to work to survive. 
This idea of government providing a basic income guarantee not tied to work may be accepted "left, right, and center," but it is anathema to the values that drive the modern Republican Party.  But if good character, education, and industry can't guarantee a middle class income for our kids and grandkids, the Republican self-reliant world view will need to change.



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