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Are the robots coming to take our jobs?

23 February 20170 comments

In predictions that closely mirror some of the xenophobic exhortations we are hearing around the globe currently in relation to migrants, a collection of experts is saying ‘the robots are coming to take out jobs’.

According to a White House report on the rise of artificial intelligence (AI), over the next 15 years, 2 to 3 million Americans who drive for a living – truck, bus and cab drivers – will be replaced by self-driving vehicles.

Another report by the University of Oxford and Citibank says that across the OECD an average of 57 per cent of jobs are at risk of being lost to automation, 77 per cent of Chinese jobs are at risk, 69 per cent of Indian jobs and 47 per cent of US jobs.

The most frightening predictions say that millions of people around the world would lose their jobs under these scenarios, potentially creating mass social unrest and upheaval.

Stephen Hawking, the eminent Cambridge physicist, warned in a 2016 article for The Guardian that artificial intelligence will leave “only the most caring, creative or supervisory roles remaining” and “accelerate the already widening economic inequality around the world”.

But mechanisation has always been a feature of modern economies. Since 1990, the US has lost 30 per cent (5.5 million) of its manufacturing jobs while manufacturing output has grown 148 per cent, according to data from the Federal Reserve.

Machines are getting better than humans at more and more things and economists are debating not so much whether machines are changing the workplace and making us more efficient but whether the result is a net loss of jobs.

The figures above may look dire but if you compare the numbers of total jobs across most economies, in many cases new jobs in new industries have more than outstripped jobs lost in manufacturing.

As we face a future populated by smart machines that can learn ever more complex tasks, what economists do agree on is that retraining people will be required.

And also that, as with any big economic shift, both winners and losers will be created. What the economists don’t agree on is the degree to which machines will replace people.

President Donald Trump’s first pick as Labor Secretary Andrew Pudzer infamously said about robots in 2016: “They’re always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case”.

The figures from Oxford study are based a ranking of 702 jobs based on the “probability of computerisation.”

Telemarketers, title examiners and hand sewers have a 99 per cent chance of being replaced by machines, according to their methodology. Doctors and therapists are the least likely to be replaced while, in the middle, with a 50 per cent chance of automation, are loading machine operators in underground mines, court reporters, and construction workers.

But another study by the Organization for Economic Cooperation and Development (OECD) looked at all the tasks that workers do their uniqueness in terms of circumstance and place. It found only 9 per cent of jobs face high a risk of automation.

So, are we living in an era so different than past periods of change? Industrialisation all but killed off skilled artisan class of the 19th century by automating processes like textile and candle making. But the conversion generated so many new jobs that rural people crowded into cities to take factory positions.

Over the 20th century, the ratio of farm jobs fell from 40 percent to 2 per cent, yet farm productivity grew. The technical revolution in the late 20th century transplanted workers from factories to new service-industry jobs.

But the Oxford study says that this time it’s different. New advances in artificial intelligence and mobile robotics mean machines are increasingly able to learn and perform non-routine tasks, such as driving a truck.

It says job losses will outpace the so-called capitalisation effect, whereby new technologies that save time actually create jobs and speed up development.

Without the capitalisation effect, unemployment rates will reach never-before-seen levels. The only jobs that remain will require workers to address challenges that cannot be addressed by algorithms.

Yet many economists argue that this new age will not be so different than previous technological breakthroughs, that the gains will counter the losses.

They cite the case of ATMs. Have they killed bank jobs? No, the number of bank jobs in the western world has increased since ATMs were introduced.

The ATM allowed banks to operate branch offices at lower cost; this prompted them to open many more branches … offsetting the erstwhile loss in teller jobs, they say.

Yet another study done at MIT says that there two effects of automation. The new technology increases productivity and this, in turn, creates a greater demand for workers to perform the more complex tasks that computers cannot handle.

But this is countered, says the study, by a displacement effect – the people who are replaced by machines may not have suitable training to take on these more complicated jobs.

As the workforce becomes better trained, wages rise. This means that inequality increases during transitions, but the self-correcting forces in our model also limit the increase in inequality over the long-run.

Machines cost about the same to operate no matter where they are located.

If it costs the same to operate a factory in China or Dandenong, maybe the question we should be asking is ‘where will the robots working in these plants be made?’

Laurie Nowell
AMES Australia Senior Journalist