"Stop saying robots are killing jobs"

An article in MIT Technology Review disputes that technology is destroying jobs, especially arguments from Brynjolfsson and McAfee which we've seen before.

Brynjolfsson and McAfee’s mistake comes from considering only first order effects of automation where the machine replaces the worker. But when a machine replaces a worker, there is a second order effect: the organization using the machine saves money and that money it flows back into to the economy either through lower prices, higher wages for the remaining workers, or higher profits. In all three cases that money gets spent which stimulates demand that other companies respond to by hiring more workers.

It's the traditional argument that demand simply shifts to new goods and services. But it relies on the traditional assumption that new needs are similar in economic terms to the old ones. In the example above, what of the higher wages for the remaining workers induce them to take more leisure, so total wages remain the same or even fall? That has not happened much to date, but it is a matter of taste rather than economic law.

The fundamental issue is how and when things fall outside the monetary economy, so the flow above springs a leak. I keep arguing that more and more of the things we value as we rise up the hierarchy of needs are harder to package in monetary terms, because they are not excludable nor rival goods. As the underlying nature of the economy changes, our institutions have to adapt too.

 

Who will prosper in the New world?

Tyler Cowen asks in the NYT:

Who will do well? THE CONSCIENTIOUS Within five years we will are likely to have the world’s best education, or close to it, online and free. But not everyone will sit down and go through the material without a professor pushing them to do the work. Those who are motivated to use online resources will do much, much better in the generations to come.

Motivation - those who have it, those who can inspire it - is one of the main themes. It's an interesting take. I agree motivation - including incentivizing behavior - is the key issue for the emerging new economy. That's why I've been so interested in some of the classic psychology on motivation, like Maslow.

 

How technology wrecks the middle class

David Autor,a well-known Labor economist, and David Dorn write in the NYT today.

The good news, however, is that middle-education, middle-wage jobs are not slated to disappear completely. While many middle-skill jobs are susceptible to automation, others demand a mixture of tasks that take advantage of human flexibility. To take one prominent example, medical paraprofessional jobs — radiology technician, phlebotomist, nurse technician — are a rapidly growing category of relatively well-paid, middle-skill occupations. While these paraprofessions do not typically require a four-year college degree, they do demand some postsecondary vocational training.

It's not wholly new - a riff on the hollowing out thesis - but worth a look.

The "experience economy" comes to the arts

This is an interesting piece in the NYT. The art/ museum world is shifting towards a focus on experiences, it argues.

In this kind of world, the thrill of standing before art — except perhaps for works by boldface-name artists like van Gogh, Vermeer, Monet and Picasso (and leaving aside contemporary artists who draw attention by being outrageously controversial) — seems not quite exciting enough for most people. What’s a museum to do?

Glenn D. Lowry, the director of the Museum of Modern Art, has seen the future. In a speech he gave a while back in Australia, he noted that museums had to make a “shift away from passive experiences to interactive or participatory experiences, from art that is hanging on the wall to art that invites people to become part of it.” And, he said, art museums had to shed the idea of being a repository and become social spaces.

I discussed the book which, according to the NYT article, looks at the commercial aspects of this idea here.

Im fact, I was in the Metropolitan Museum yesterday, and walked around their newly rehung and expanded European paintings section. They now have what appear to be little iPad-like devices in front of some of the paintings, with simple analysis videos which are very effective.

Of course, they've had iPod-like audio devices for years, although I seldom use them. And I love their 82nd and Fifth series of two-minute videos about pieces.

But there must be so much more scope to put particular pieces or objects in context. Perhaps in five years, there will be video of some of the original settings for the Egyptian artifacts right beside them in the museum, for example.

Indeed, there could be a whole separate museum or area which looks for just a few pieces at a time in depth, using audio-visual means to delve deep into context, to enter into the world represented by the piece - the culture, the setting, the artist, ideas about art, how it fitted into the history of the time, audience and reception, technique, how it affected other art or ideas. The Met is dazzling in its breadth, but taking just a few things and looking very closely could be highly rewarding.

Instead of a room with twenty pieces of art, there could be one piece of art with twenty screens and a soundtrack. That could be inspirational, as well as a matter of participation and experience.

Artists often claim pieces speak for themselves. But they often speak in code, demanding knowledge of why and how the art has come about. More depth of context could challenge people much more to think and feel and respond to something encapsulating a different age and point of view. The key would be to go deep enough to challenge the superficiality or assumptions a viewer brings to the piece.

 

Moving on from Clippy

"Bill Gates says software assistants can save the world," says MIT Technology Review.

Readily accessible floods of data, combined with powerful cloud computing and advances in software, should allow personal assistants to “understand” what humans are doing and actively collaborate or help them out, said Gates. Smart assistant software could even be crucial in addressing some of the world’s most challenging problems, he said, as identified by his philanthropic organization the Gates Foundation.

Gates said, for example, that software able to intelligently interpret the available data about a person and respond could improve education.

The software agents could help make decisions, too.

Gates imagined an assistant helping a Kenyan farmer using the M-Pesa mobile banking system that handles roughly 30 percent of the country’s GDP (see “Shopping via Text Message”). “When I sell my crop after the harvest, it advises me to save some of my money and even makes that deposit,” said Gates, who praised the data M-Pesa has made available for such projects

Clippy, the notorious Microsoft paperclip "helper", had perhaps just been premature, he said.

Clearly, there's something to this argument. But for now, I find the services available surprisingly primitive. Nobody has yet developed an effective assistant to help prioritize an email inbox, for example (at least commercially). Junk filters and prioritizing some senders is about all email programs do. Compare this to the confident hopes about artificial intelligence and expert systems in the 1980s. Far from super intelligent computers taking over the world, they can barely sort important work time-sensitive email from routine information emails.

And for all the discussion of predicting wants and needs, I still find one of the most common examples, Netflix suggestions, amazingly primitive sometimes. It has not yet figured out there is a man and a woman in our house and they often like different movies.

The difficulty has always been computers have difficulty with context and meaning. Brute force and massive amounts of data, such as Google Machine translation, is starting to change that. However , it looks like we're just going to see specific small-scale helpers for the time being.

That could still have an impact in education or office productivity. But expectations have also fallen.

 

 

"For the Last Time, Robots Do NOT Cause Unemployment"

Here's a pushback at RealClearMarkets against recent worries about technology and the job market.

Parts of the nation's commentariat have been seized, in recent months, with a nasty bout of technophobia. Technophobia is a psychological condition, but infectious. Hardly a week goes by without a new outbreak documented in another blog post or business column. To judge from the symptomatic hand-wringing the epidemic is spreading, we are on the verge of mass unemployment as work becomes increasingly automated.

As I've often said, it is clearly true that there has always been an increase in aggregate demand for labor in the past. But to argue that will continue indefinitely carries an assumption the nature of needs and wants is static. Economics is not that good at understanding changing needs and preferences. Instead, they are treated as exogenous. And that is a foolish assumption.

In fact, it's not at root an economic problem. It's an ethical and instiutuonal problem. There needs to be deeper change and adaptation in economic institutions. That more attention to issues of the "good life " given basic economic survival is no longer the prime problem facing humanity. The labor market achieved huge prominence in the industrial revolution period, dominating life in a way which would have been inscrutable to medieval peasants on the land, or aristocratic Romans. It may be less prominent in the future.

"Sympathy for the Luddites"

Paul Krugman says technological disruption is real, and argues redistribution is the only way to deal with it.

And the modern counterparts of those woolworkers might well ask further, what will happen to us if, like so many students, we go deep into debt to acquire the skills we’re told we need, only to learn that the economy no longer wants those skills?

Education, then, is no longer the answer to rising inequality, if it ever was (which I doubt).

So what is the answer? If the picture I’ve drawn is at all right, the only way we could have anything resembling a middle-class society — a society in which ordinary citizens have a reasonable assurance of maintaining a decent life as long as they work hard and play by the rules — would be by having a strong social safety net, one that guarantees not just health care but a minimum income, too. And with an ever-rising share of income going to capital rather than labor, that safety net would have to be paid for to an important extent via taxes on profits and/or investment income.

It's interesting evidence mainstream economics is starting to get worried about this issue. He's not providing a "but these fears have always been misplaced in the past" usual take.

The trouble is redistribution without some sense of who deserves what isn't going to fly. This is the left's problem: people don't believe equality is the same as justice (or "fairness".) We can't solve this without having some sense of what we value, or what the good life is. And liberal neutrality on that question, and its focus on material resources and income above all, makes that impossible.

Krugman's solution also assumes there will be supernormal profits, but technology may compete and innovate those away, too. In a perfect market profit is zero, after all, and tehnology is removing barriers to entry and market segmentation.