The additional impact of robots, AI, and other automation..

We are beginning to see more and more stories about how technology is replacing workers. That has happened for a long time, ever since we developed “mechanical muscles”. But, in the past, technology relieved humans from drudgery and created new opportunities. However, I believe, that we may be reaching a turning point where technology does not necessarily create new employment opportunities.

For example, let us say Jim-Bob just barely graduated from high school and got a job at the local warehouse. For the first six months, all he does is sweep, move boxes by hand, and any other menial tasks needed to be done. But after six months, the supervisor notes that Jim-Bob is honest, works hard, and shows up on time and they invest in him by sending him to fork lift school, OSHA training, etc. Next thing you know, Jim-Bob is driving one of the forklifts on the late shift and is starting to make good money for a young single guy. He can now afford an apartment and new car, nice clothes, etc. and starts dating. He meets Carly-Sue at the local meat and three and they get serious, buy a ring, and make it official. Their wedding was nice, a pleasant honeymoon, and two years later Jim Jr. is born, followed closely by Missy. The apartment is getting crowded, so they find a house in a good school district, and settle in for the long haul. Along the way, Jim-Bob and Carly-Sue buy appliances, cars, boats, clothes, TVs, computers, school supplies, food, eat out, go on vacations, on and on. Jim Jr. is accepted to good college and Missy gets a scholarship to the Ivy League. Life is good. Jim-Bob is now a grandpa, retires from the warehouse where he is now the assistant manager, and Carly-Sue sells her bakery so that she and Jim-Bob can enjoy retirement and travel the world, take in a cruise or two.

Enter an automated forklift at the warehouse… it works 24/7/365 for $2.20 an hour. It does not join unions, does not take a smoke break, does not have to leave early to take Jim Jr. to baseball or Missy to soccer. It just works. In this new world, what does that mean to the next generation of workers?

No job for Jim-Bob, no money to start a life with Carly-Sue, and no distribution of wealth to all of the business owners, that supported their life style. No money to buy a new house, so no house was built for them, so all of the construction people were put out of work (masons, carpenters, electricians, sheet rockers, painters, HVAC techs, roofers, on and on). No wedding, no venue, no wedding planner, no cake, no reception, no honeymoon. No kids, no kid toys, no school supplies, no need for teachers, etc. I could go on, but you get the point. It is not just the job at the warehouse, but all of the jobs that the job at the warehouse supported along the way for the 30+ years of Jim-Bob and Carly-Sue’s working life. Whether those supporting jobs are replaced by automation is almost a non-issue, they will not exist because Jim-Bob and Carly-Sue do not have money to pay for the products and services the supporting industries provided.

Please do not misunderstand; I am not anti-technology. It is inevitable, and it is happening faster than most of us are ready to understand the impact. I do believe that we need to start discussing this issue in education TODAY so that we can prepare the next generation for the life in this new age of automation. We are already seeing the leading edge of these changes in remote areas, but within five years, it will be a commonplace occurrence, and may take twenty more years work fully through developed world economies, but by 2030, I predict that most of us would not understand the world that we have created.

The following articles attest to some of the changes taking place already or in the near future.

Driverless trucks

Driverless automobiles

Warehouse robots

How should we prepare our children for tomorrow?

2 thoughts on “The additional impact of robots, AI, and other automation..”

  1. Enter an automated forklift at the warehouse… it works 24/7/365 for $2.20 an hour…No job for Jim-Bob, no money to start a life with Carly-Sue…

    Although Jim-Bob doesn’t eventually purchase all the products and services over the next 30+ years, the money doesn’t disappear.

    Say Jim-Bob was making $10.00 an hour as a forklift operator. Assuming the $2.20 of the automated forklift covers maintenance, energy, depreciation, and any amortization for its hourly use, then the company retains $7.80 it previously didn’t have. This could manifest itself in many ways:
    * Reducing prices to be more competitive. Customers save more and spend their savings on products and services. They could even be the same products and services Jim-Bob would have used, just not with Jim-Bob as the customer anymore.
    * Scaling the company. Larger warehouses and more (skilled) staff will now enable them to service more people and the new staff will spend that money on products and services like above.
    * Retained earnings distributed to owners. The owners now keep that extra money and spend it on possible luxury items creating jobs in those spaces.

    So, the money still exists, and if it gets spent will still help create jobs and opportunities for others. Those others just have to be more skilled than automatons or in spaces where automation is still not capable of taking over. Moral of the story, a good living is still possible in the years to come, but relying on just being a human isn’t enough. Skill and expertise barriers are being erected and will slowly rise.

    1. Yes, the capital will still be in existence, but who will control that capital? In the past, the majority of workers traded their labor for a piece of that capital in a mutually beneficial relationship. Labor provided something that owners of capital needed, and owners of capital shared that capital with labor to increase their capital through production of products and services. Now, that arrangement is under question. If owners of capital can increase their capital without sharing it with owners of labor, then we need to consider other forms of wealth redistribution. There is no law of economics that requires owners of capital to spend that capital in a way that enhances society.

      The owners now keep that extra money and spend it on possible luxury items creating jobs in those spaces.

      That is essentially what happened with the castles in Germany. The royals hired local artisans to create the legacies that exist today, and local labor to staff the castle. However, a review of history will remind us that does not always happen, or is it sustainable. The point is that the relationship between labor and capital has been changing slowly since the beginning of the industrial age in the favor of capital. Recent technological innovations threaten to hasten that disparity in the short term. Yes, in the long run, a new equilbrium will be reached, but how will the vast majority of mankind, that is not in possesion of great amounts of capital, survive?

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