The White House released a new report this week entitled Artificial Intelligence, Automation, and the Economy, as part of an admirable but very flawed initiative to understand the impact of the new technology on American employees.
But the report focuses just on automation while averting attention from the simultaneous and interactive impact of progressive policies that favor immigration, outsourcing, and wage-distorting legislation.
“Accelerating AI capabilities will enable automation of some tasks that have long required human labor,” the White House said when introducing its new report.
These transformations will open up new opportunities for individuals, the economy, and society, but they will also disrupt the current livelihoods of millions of Americans. The new report examines the expected impact of AI-driven automation on the economy, and describes broad strategies that could increase the benefits of AI and mitigate its costs.
This new study differs from previous efforts in that it takes artificial intelligence — whether in robots, driverless autos, Wall Street stock-trackers, hospital emergency rooms, Internet servers or workplace software — very seriously, as a step beyond what industrial robotics and computers have already done to the economy. It is a mixed bag of caution and optimism, following each warning of disruption with enthusiasm about the opportunities that may be created. For example:
Some tasks will be more easily automated than others, and some jobs will be affected more than others – both negatively and positively.Some jobs may be automated away, while for others, AI-driven automation will make many workers more productive and increase demand for certain skills. Finally, new jobs are likely to be directly created in areas such as the development and supervision of AIas well as indirectly created in a range of areas throughout the economy as higher incomes lead to expanded demand.
What effect will this have on the labor market? The report cites estimates that range from “9 to 47 percent” of jobs will be “threatened”… which is a hell of a broad range. Nine percent would be a serious concern. If 47 percent of jobs are threatened, we’re looking at economic turmoil far greater than the Great Depression.
The nature of that threat actually sounds quite grim, despite the report’s effort to find a shelter from the gathering thunderclouds of everyday super-computing:
Research consistently finds that the jobs that are threatened by automation are highly concentrated among lower-paid, lower-skilled, and less-educated workers. This means that automation will continue to put downward pressure on demand for this group, putting downward pressure on wages and upward pressure on inequality. In the longer-run, there may be different or larger effects. One possibility is superstar-biased technological change, where the benefits of technology accrue to an even smaller portion of society than just highly-skilled workers. The winner-take-most nature of information technology markets means that only a few may come to dominate markets.If labor productivity increases do not translate into wage increases, then the large economic gains brought about by AI could accrue to a select few. Instead of broadly shared prosperity for workers and consumers, this might push towards reduced competition and increased wealth inequality.
But this effort to understand the threat is crippled by political paralysis — the only policy prescriptions offered by this White House report for dealing with the challenge of increased automation is the exact same advice given by politicians for the past few decades.
The answer to automation everywhere, according to the White House, is to spend more money on teachers and education, spend more money on government employees and retraining, and spend more money on helping compliant workers “transition” to “broadly shared growth.”
In other words, the political class has absolutely no idea how to deal with this challenge, and remains resolutely unwilling to admit it has wasted countless billions of our dollars on a failing educational system and job-retraining boondoggles.
We already have a public education system of mind-boggling expense, whose employees comprise the most powerful unionized political lobby in America. And yet, we’re perpetually told our children are so poorly prepared for the workforce that we must import huge amounts of foreign labor, at both the top and bottom of the skill spectrum.
Workplaces are already entangled in regulations that increase the employers’ cost of hiring people, and worsens risks for investors who bet their cash whenever they create new companies.
Hi-tech companies are constantly agitating for more visas to bring in more foreign workers to handle the very high-tech jobs this White House report tells us are the only hope for the next generation of American workers, and yet Democrats are eager to increase the inflow of immigrants and temporary H-1B contract-workers.
The example of restaurant work is instructive. Minimum-wage increases (which are, in turn, partially encouraged by the way other government regulations and taxes distort the price of necessary goods) have made it feasible, and even necessary, for restaurant owners to automate jobs sooner than technological progress would suggest. Long before it really should have happened, robots are taking orders and making food; customers are growing accustomed to the lack of human interaction.
An irreversible process is under way, ahead of schedule, leaving us with far less time to adjust the workforce to this new reality of immigrating robots — while our archaic immigration policy annually imports one foreign person for every four Americans who turn 18, and which has pushed roughly seven million working-age men out of the workforce.
There is not even much evidence that progressives’ default answer — more education! — can fix the problem.
When the Pew Research Center published a study on automation a few years ago, optimistic experts made predictions such as “Robots will replace service and manufacturing jobs, but will open up more possibilities in tech and development” and “some classes of jobs will be handed over to the ‘immigrants’ of AI and robotics, but more will have been generated in creative and curating activities.” The new White House report contains nearly identical optimistic speculation.
However, the Pew study warned that our education system “is not adequately preparing us for work of the future, and our political and economic institutions are poorly equipped to handle these hard choices.” The comparison of robots to ‘immigrants’ made above is ominous, because the decline in overall workforce size and increasing under-employment of the past few years suggests a large number of people can’t adjust to an economy where they have been priced out of the labor market.
We don’t know if it’s truly possible, in a nation of America’s size and diversity, to address that problem by increasing the value of human capital until the number of marginal workers is dramatically reduced – in other words, educate the populace so well that they can do jobs better than untiring and uncomplaining robots can do for a cost $7.25 per hour in electricity and periodic maintenance.
It that is to be our strategy, we need to do a lot more than just throw more money at the education bureaucracy. We need to radically rethink how we educate our children, and how long we keep them in school. That is to say, no more hideously expensive prolonged adolescence in which high school is basically overpriced daycare for teenagers, and college is filled with garbage courses that actually make young people less valuable as employees, by teaching them to become maladjusted social justice warriors.
We need a lean, mean, highly vocational education machine that puts skilled and highly motivated people into the workforce in the prime of their youth. They need to take the economic field as pumped-up as any sports team, ready to win a competition against the machines.
We must also reduce labor cost by cutting tax and regulatory costs. The dirty little secret is that wildly inflated labor costs have helped to conceal the true cost of mega-government for generations. Some of those costs are nipped painlessly from paychecks by automatic withholding, while others are paid by employers, visible only to workers who study their paycheck stubs very carefully, or walled off from the payroll system altogether. If we’re going to make human labor cost-competitive with advanced machines, this dishonest game must end, and soon. Human workers cannot be expected to compete with robots while shouldering the cost of bloated, parasitic government.
The White House report calls for pouring even more money into “social safety net” programs, including a food-stamp program already grown to titanic proportions in the Obama years, to handle a growing number of able-bodied people who can’t find work. This is monstrously wrong-headed. The last thing we can afford is reducing the incentives for marginal workers to seek employment.
Also, streamlining those programs to remove waste and fraud is vitally necessary for addressing such greater demand as does occur, and no government program has ever been effectively reformed after a dramatic increase in funding.
We would be committing socialist suicide by laying an ever-growing tax burden upon a perpetually-shrinking number of workers to support an exploding number of unemployables. This is the terminal cancer affecting so much of the Western world, for reasons ranging from falling birth rates and growing life expectancies, to unrealistic social programs: a smaller number of wealth-generating workers supporting a growing number of dependents.
Artificial intelligence could make that imbalance dramatically worse. The ratio of workers to dependents was 10 or 20 to one when many social programs were conceived; now it’s falling to 4-to-1 or lower. What happens when 9 percent of those jobs are taken by robots who don’t pay taxes? What if it’s 47 percent?
In an interview with the Financial Times, Nobel Prize-winning economist August Deaton pushed back against the tendency to blame generic “globalization” for the problems in areas like America’s Rust Belt, musing: “I don’t think that globalization is anywhere near the threat that robots are… It’s hard to think that Mark Zuckerberg is actually impoverishing anyone by getting rich with Facebook, but driverless cars are another matter entirely.”
That’s an interesting observation, but globalism vs. robotics is not really an either-or question. Some forms of globalism can combine with automation to become a worse threat than either would be separately, such as distorting the human labor market by erasing national borders. The citizens of Western nations are told they must shoulder immense costs, while the governments they pay for feel increasingly less responsibility toward them, and the trans-national elite preen as “citizens of the world.” An automated workforce will make every undesirable element of that situation worse.
Writing at The Week, James Pethokoukis looked at the White House AI report and wondered if economic protectionists would become neo-Luddites, smashing the machines which threatened their jobs. “Anti-trade arguments could easily morph into anti-technology arguments, or at least more generalized skepticism over faster economic growth,” he warned.
The real issue might be the enduring arrogance of central planners who think they can manage every part of this evolving economy from Washington. Pethokoukis wants policymakers to “make the pro-progress argument in favor of dynamism over the illusory security of stasis.” I would submit the overweening power of “policymakers” is the reason so many people are attracted to secure stasis these days. Perhaps historians of the future will conclude the past few decades were time we couldn’t afford to lose to the daydream of Big Government and politicized economics, before the age of artificial intelligence began, and we never recovered from the loss.
There is speculation we could be facing “the end of work,” and the beginning of an era when machines handle so much of the work that it’s no longer possible to follow the ancient principle of “you work and you eat” – in other words, compensation for labor is how scarce resources are allocated for most of the population. Abraham Lincoln defined the spirit of tyranny and slavery as, “You toil and work and earn bread, and I’ll eat it.” What happens when a vast number of people are given bread without toil, thanks to automated labor? Won’t that be fertile ground for tyranny, even if no slavery is involved?
The people of advanced economies poised to begin such a fundamental transformation need time to adjust. We can no longer allow foolish ideologies to steal that time from us.
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