Beating a Dead Robotic Horse

NOTE: The Growth Economics Blog has moved sites. Click here to find this post at the new site.

One of the recurring themes on this blog has been the consequences of robots, AI, or rapid technological change on labor demand. Will humans be put out of work by robots, and will this mean paradise or destitution? I’ve generally argued that we should be optimistic about robots and AI and the like, but others have made coherent arguments for pessimism. I spent a chunk of this week reading over posts, both new and old, and thinking more about these positions.

If there is one distinct difference between the robo-pessimist and robo-optimist view, it is almost exclusively down to timing. The pessimists are worried that the rapid decline of human labor is occurring now, and in many cases has been occurring for a while already. The optimists believe that we have time in front of us to sort things out before human labor is replaced en masse.

Brynjolfsson and McAfee‘s latest is a good example of this robo-optimist view. They concede that human labor is in danger of being replaced:

But will there be enough demand, especially over the long term, for those two types of human labor: that which must be done by people and that which can’t yet be done by machines? There is a real possibility that the answer is no—that human labor will, in aggregate, decline in relevance because of technological progress, just as horse labor did earlier. If that happens, it will raise the specter that the world may not be able to maintain the industrial era’s remarkable trajectory of steadily rising employment prospects and wages for a growing population.

But at the same time they do not think this is imminent:

But are our interpersonal abilities the only ones that will allow us to stave off economic irrelevance? Over at least the next decade, the answer is almost certainly no. That’s because recent technological progress, while moving surprisingly fast, is still not on track to allow robots and artificial intelligence to do everything better than humans can within the next few years. So another reason that humans won’t soon go the way of the horse is that humans can do many valuable things that will remain beyond the reach of technology.

On the robo-pessimism side, Richard Serlin has a mega-post about the declining prospects for human labor and the possible consequences. What is interesting about Richard’s post is that he essentially makes the case that the replacement of human labor by automation has been occurring for decades; we are already living with it.

He cites a 2011 Miliken Institute report,

Surely, the most astonishing statistic to be gleaned from the trend data is the deterioration in the market outcomes for men with less than a high school education. The median earnings of all men in this category have declined by 66 percent [not a misprint] [from 1969 to 2009]. At the same time, this group has experienced a 23 percentage point decline in the probability of having any labor-market earnings. Roughly 10 percentage points of the 23 percentage points is attributable to the fact that more men are reporting disabilities, even though work in physically demanding jobs has been declining for many decades. Men with just a high school diploma did only marginally better. Their wages declined by 47 percent and their participation in the labor force fell by 18 percentage points.

Richard’s point is that demand for unskilled (male) labor has shrunk demonstrably over the last few decades, and that this is only going to continue as robots or AI or automation come online. Even if you include the increase in female labor force participation, we’ve seen in the last 20 years that labor force participation has flatlined and started to decrease.

There isn’t a lot of daylight between the robo-pessimists and robo-optimists. Both are wary of the replacement of human labor. The big difference is whether you think this is a present or a future problem. It is becoming hard to see what is optimistic about the robo-optimist viewpoint.

I think it is helpful to get beyond the binary viewpoints. Let’s divide things up as follows

  • Strong robo-pessimism: Robots and AI will come no matter what we do. They will reduce demand for labor so much that the majority of humans will have no work to do, and we will be at the whim of the minority of robot/AI owners. The “horse argument” is a form of strong robo-pessimism.
  • Weak robo-pessimism: I’d classify Richard Serlin here. Weak robo-pessimism thinks that labor is already being replaced, but there are things we can do to ameliorate this: education, redistribution.
  • Weak robo-optimism: Brynjolfsson and McAfee are a good example of this viewpoint. Possibility that labor will be replaced, but this hasn’t occurred yet. We have time to adapt to the distributional issues.
  • Strong robo-optimism: Robots and AI will come no matter what we do. They will create a scenario of material wealth such that humans will no longer need to work, but if they want to they will always be able to invent something new to do.

One of the issues in discussing these topics is that we often are not arguing with the right group. Weak robo-optimists use Strong robo-pessimists as their straw man. Weak robo-pessimists use Strong robo-optimists as their straw man.

I am as guilty of this as anyone. I think the argument that humans are doomed because “look what happened to horses” is stupid. People are not horses, they are apes. And apes are intelligent, creative, and social. The last one is very important, because it means we have a built-in demand for being around other people. A demand that we routinely pay to have supplied. We will always find ways to pay other people to interact with us.

The horse agument, though, is a form of strong robo-pessimism. When I go after it, it makes it seem as if I have a real distinct difference from someone like Richard, a weak robo-pessimist. I don’t. I think I am a weak robo-optimist.

And if you really get down to it, the implications of the weak forms are not really different. Read through Richard’s post or the Brynjolfsson and McAfee post, or this article in the Guardian, or this one in the FT, you get the same advice from weak robo-pessimists and weak robo-optimists.

  • Training. We need to equip people with skills that allow them to move into jobs that are harder to replace, or at least to keep leapfrogging into jobs before robots replace them. Different people mean different things by “training”, but it runs the gamut from pre-school to vocational school.
  • Redistribution. Whether this is simply taxes on wealthy robot-owners, state ownership of robots, or some kind of robot share-ownership plan, the idea is the same. Spread the returns from owning robots around to everyone.

One interesting thing I see is that the robo-pessimists tend to be more worried about training. You have to keep providing people with skills to compete with robots. But it is important that people work, or can work, or should work.

Robo-optimists tend to be more worried about redistribution. How do we reallocate ownership or the proceeds of ownership so that everyone can maintain living standards?

The more I thought about it this week, the more I think the important distinction between the optimists and pessimists is in their attitudes towards work. The optimists ultimately see the decline in working hours for humans as a good thing. Yes, there are issues with distribution, but those details can be attended to. How great will the world be when we all only have to work 5 hours a week?

The pessimists see the decline in work hours as a distinct problem. This need not be because they have some Puritanical need to see people act busy, but rather because they don’t see how we could solve the distributional issues necessary to ensure people can afford a basic living standard. The best we can do is to ensure that people can continue to work full time in order to meet their needs. How awful will the world be when we can all only work 5 hours a week?

As I said above, I tend to be a weak robo-optimist. I, like Brynjolfsson and McAfee, completely agree that robots/AI will create a drag on the demand for human labor, and in particular unskilled labor. My robo-optimism isn’t a belief about technology. It is a belief that we can figure out how to manage the glide path towards shorter work hours while maintaining living standards for everyone. It’s a good thing that we’ll have to work less.

And there remains a little piece of strong robo-optimism lurking inside of me. I don’t think work less is really well defined. We will likely have to spend less time working for wages to afford the basic material goods in our lives. But that doesn’t mean we won’t spend lots of our time “working” for each other doing other things. Whether that work is paid in wages or not is immaterial.

 

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17 thoughts on “Beating a Dead Robotic Horse

  1. The interesting point related to horses/agriculture is not that “humans are horses” but that “when agriculture saw massive productivity improvements in the developed world, the fixed factors still got the rents.” What I mean here is that owning capital in a competitive industry with rapid productivity growth is not a great way to get wealthy. Unless we really screw up our IP laws, and probably even if we do screw it up, the price of any general purpose software will fall to MC, or zero. Worries about who will own the robots and growing inequality sounds to me exactly like worries about who will own the farmland in the 19th century: agricultural land ownership is very concentrated (in that 99% of us own none at all!) and yet the result of this huge shift is just that agricultural output became cheap.

  2. The pessimists are worried that the rapid decline of human labor is occurring now, and in many cases has been occurring for a while already.

    What rapid decline of human labor? Hasn’t he heard of women’s descent into the work force?

    And the labor market doesn’t seem like one particularly starved of work to be done recently:

    https://research.stlouisfed.org/fred2/graph/?g=31nG

    I am a strong robo-optimist, but, sadly, I can’t see that scenario happening any time soon, given the productivity stagnation in both the First World and in much of the second.

  3. Can the increase of robots be considered in relation to growth theory. GDP generally goes up although it is not all to do with the robots. It seems the use of robots is considered more in relation to welfare not growth or welfare and growth.
    Can it also be considered in relation to income and recent income trends.

  4. Thanks for the insights, this is a useful way to map out the gamut of positions. Allow me to add on…

    1). I don’t think automation is the primary threat to lower-skilled developed world labor. Globalism combined with automation and better integrated markets is the issue. The total number of global lower skilled jobs has been rising steadily, and wages globally have actually skyrocketed. However, the expansion in labor has driven down the wages of previously more scarce factor of labor in developed nations. We are seeing a generational trend toward factor equalization. Once this equalization process plays out, we will be left just with the technological replacement component. The same process has been driving up demand for the more scarce factors of capital and skilled labor, leading to further inequality in developed nations. However this is clearly a great thing overall as it is the market doing its problem solving creative job and is greatly enriching humanity in the process.

    2). The real issue is the rate of change. Gradual changes are easily absorbed with new entrants into the workforce. The problem is thus the pace of technological change, or as above, the pace of tech and global market expansion combined. If technology evolves faster, we will need to respond faster. Or vice versa.

    3). I agree with your emphasis on education, but disagree vehemently with your paradigm on how the issue is solved. I believe additional spending on education is no better than pissing into the wind. Special interest groups will just claim it — school administrators, teachers unions, tenured faculty, facility maintenance, dysfunctional industrial-era educational paradigms, sports networks, banks making loans, and an explosion of millions of useless degrees in politically correct, liberal arts nonsense. The emphasis isn’t in more education, it is on widespread, decentralized processes which encourage and supports people to educate themselves in useful, socially productive ways which resist political rent seeking groups from exploiting the process.

    Obviously this issue is bigger than this comment, but in general we need to rethink what successful education and educational institutions can look like. I have disdain for expanding the ones we have now. Might as well just burn money or pay the Wizard of Oz to hand out signaling diplomas.

    4). Redistribution is as much of the problem as it is a solution. The escalating ranks of supposedly disabled workers and the growing ranks of retired are symptoms of the problem. Don’t get me wrong, I think retirement and disability insurance are great things, when properly designed. But the final three words of the preceding sentence are carrying a lot of weight. Today, like education, they are not very well designed, especially for the technological challenges of the future. Poorly designed redistribution programs will effectively incentivize useful human beings to opt out of the network of mutual problem solving called society. We risk creating a growing class of human parasites, who find it easier to free ride off the productive and the technology the productive create.

    5). Complicating the prior issue is that leisure is extremely challenging for people, especially those with lower intelligence and foresight. Being retired or unemployed is extremely challenging for thriving human beings. We get bored, feel useless and develop terrible habits and vices as we seek stimulation, challenge, status and purpose.

    Again, this topic is bigger than this comment, but we need institutions which foster codependency not dependency. Failure to address this issue will create an issue which makes the inner city minority unemployment issues of places like Baltimore and Paris look like minor concerns compared to huge segments of human free riders devoid of purpose, meaning, challenge and contribution which we will create.

  5. “My robo-optimism isn’t a belief about technology. It is a belief that we can figure out how to manage the glide path towards shorter work hours while maintaining living standards for everyone.”

    Here there’s a crucial point to make.

    This is fundamentally, mostly, I think, an argument not about economics or technology, but about politics. This really depends on the politics. On the political system. On which party we vote for. This is the biggest reason (depending on how you define biggest reason) why I am a “weak robo-pessimist”. Because if many or most of the people who control the Republican party could get what they wanted, it would end up more like Elysium than this nice glide path of widespread prosperity and amazing lives.

    Already, very much due to the efforts of the right, and their dominance over the last generation, we haven’t at all managed “the glide path towards shorter work hours while maintaining living standards for everyone.” At least half the population has very serious economic insecurity. And for the low-skilled; well, you’ve seen the statistics.

    So, when you make a determination of how well this will go, if there’s not that much disagreement about the technological and economic issues, then it comes down to politics. So, understanding of our political system will be important.

    I don’t have any formal degrees in politics, just economics and business, but I have been a politics junkie since age four. I’m constantly reading up on it, and following it. It’s my first and possibly biggest hobby (depending how you define hobby). You can see my opinions of the politics in my megapost. I’m basically a robo-optimist — over the long run. Quoting me, in that post:

    “How are we supposed to get the vast majority of men, and women, up to this level of skill and education?

    To do so would take a regime shift in our politics, and in public understanding of economics. By and large, one of our two major parties not only does not believe in global warming, or evolution for that matter, they don’t believe in externalities, asymmetric information, natural monopoly, contracting limitations and costs, and basically anything that says the pure free market is imperfect (except in cases where it benefits the rich). But providing a massive increase in the education, skills, and general capabilities for most of the population is something that free market companies could only extract a small fraction of the benefits from in profits. And therefore they alone would grossly underprovide this.

    The externalities, contracting and enforcement problems and costs, adverse selection and other asymmetric information, and so on, are profound and enormous. This is why general education has historically been predominantly publicly funded. To say that now, so that most of the population won’t go the way of horses, we have to enormously increase our investment in Heckman-style early human development, education, public nutrition, healthcare, and more, from prenatal until at least well into a person’s 20’s, is to say that we should have an unprecedented increase in governments’ size and roles.

    Right now, this is impossible, as the Republican party is dogmatically against any government, except for a small number of areas; mainly military, police, courts, prisons, and perhaps minimal public infrastructure and education.”

    But, I add:

    “Eventually, there is a good chance that AI will reach the point where few if any humans will be smart and skilled enough to do anything pecuniary that a machine can’t. At that point, substantial redistribution will be unavoidable. Most people have little wealth outside of their labor endowment. If that becomes worthless, they quickly starve without redistribution [3]. If we can maintain a democracy, in spite of the efforts of many plutocrats, then large-scale redistribution will probably be inevitable.”

    So, over the long run, with powerful demographic change towards the Democratic party, and with more and more people becoming so desperate that even maximal billionaire powered propaganda won’t make them vote to starve themselves, I think we will vote for a great increase in redistribution and human development investment, and democracy will survive plutocracy’s assaults.

    But all this comes down to analysis of the politics, not the economics or technology about which there doesn’t seem to be that much disagreement between us.

    As far as the desirability of maintaining work, when people need, or can, only work few or no hours for material goods, I’m not really a work for work’s sake person. But again, the politics; it’s a lot more politically feasible to pass money in exchange for working on education, self-improvement, becoming a better citizen, than just pure redistribution.

    But it is more than that. Externalities are enormous and profound. People depend on people. As you note, we are social animals. If you just give people money and don’t require that they become educated and good citizens, then first; these people are much worse voters, and that can really hurt us. I’m sure this is obvious. But also, the externalities are huge when the people around you have degraded by not working to become better people. We require all children to go to school not just for economic reasons.

    More, as time permits…

  6. One more quick, but important one:

    “They will reduce demand for labor so much that the majority of humans will have no work to do, and we will be at the whim of the minority of robot/AI owners.”

    It’s not necessarily just the robot/AI owners. A huge amount of the “bounty”, as Brynjolfsson and McAfee like to call it, will go to “winner-take-alls” (WTA’s), who still have important and rare skills that the robots/AI’s don’t; rentiers: owners of patents, or otherwise of high monopoly-power (or market power, to use a more official term); and owners of raw materials that are relatively rare and important for the robots/AI’s.

    I like stocks as a hedge, or insurance, against personal robot/AI catastrophe because they give you not just a wide diversity of ownership of robots/AI’s, but also a wide diversity of rents (market power) and raw materials, and some bargaining power with the WTA’s.

  7. As far as the horse argument, I think it depends on what analogy you’re trying to make. What are you trying to generalize or abstract. I’d put it this way:

    Horses can’t innovate on their own behalf, like humans. But, humans can and did innovate for horses. When technology changes, humans try to find new uses for horses. Competitive pressures, and just greed, makes owners and managers of businesses always try to think of the best new innovative ways to use and/or train any input of production. So, for the purposes of effects on the demand for an input, it’s really the innovating that counts, not who does it. The human brains that innovate for a human’s self also innovate for horses. And I’m quite sure that people in the horse industry frantically tried to find innovative ways to use horses as machines advanced, and ways to better train and raise horses.

    I think an analogy stands in that, at some point, the feasible innovating is just not enough, and this is true of any input, whether it’s an input where others innovate for it, or it innovates itself. The competing inputs just get too good, and your innovations, whether self-made or made by others, just aren’t good enough to stop a massive move to the left of your demand curve.

    Humans can innovate for themselves in response to technological advance, in response to a burgeoning robot/AI revolution; this is why recently college graduation rates have risen greatly (I’m looking at these figures now: http://www.census.gov/hhes/socdemo/education/data/cps/historical/index.html ). But will the innovation be enough? With any input of production, in facing technological change, and increasingly competitive substitutes, there will be an attempt by very smart humans to innovate its use so that its demand doesn’t decrease greatly. But sometimes the innovations just aren’t enough.

    With humans, the bar is very high right now to innovate enough. A big percentage aren’t clearing it, and for a big percentage it may not be feasible to clear it, and that bar just keeps going up. What if it becomes that innovating enough means getting a bachelor’s degree from a nationally-recognized research university, and with actual strong critical thinking skills, communication, and technical skills? What percentage of the population will not succeed at doing this (with the current level of government help and early investment). What about when the bar goes up from there?

  8. Yes, and then there’s the social part of the horse counterargument:

    “People are not horses, they are apes. And apes are intelligent, creative, and social. The last one is very important, because it means we have a built-in demand for being around other people. A demand that we routinely pay to have supplied. We will always find ways to pay other people to interact with us.”

    Yes, humans are social. But you don’t have to pay people to be your friends, at least most people don’t have to. Suppose technology and politics moves such that 99% of the population owns nothing, and there’s nothing pecuniary they can do other than their social interaction that robots can’t do for much less than a subsistence human wage.

    The 1% own all the robots and raw materials. The only way to get an income for the 99% is from the 1%.

    Are the 1% going to have to pay the 99% to meet their social interaction needs? Well, do the rich people in the foothills go down to the poor inner city neighborhoods and pay people to be their friends, or interact with them? They seem to do the opposite, move far away and put up gated communities.

    The 1% can get all of the human interaction they want without paying someone just from their fellow one-percenters in their one-percent cities, playlands, and clubs. I don’t think this need for human interaction is going to save the 99% if their labor ceases to have much value for material production.

    And really, wouldn’t death be better than a life as one of Donald Trump’s flunkies?

    • And no, the one-percenters won’t want to pay more, a lot more, to have a human teller instead of an ATM or cell phone — this we’ve very clearly seen. People want speed, ease, and quality in their daily services; they don’t seem to care much about being able to chat with the human checkout clerk or teller when they get these services done. Moreover, experiments are showing that people very quickly get comfortable and satisfied with pleasant, cute, nice and easy robots and computer interfaces.

      I think most people will gladly take even a robot waiter that costs 1% over a human waiter who costs 15%, and is a lot slower, less quick to see you and respond, brings the food colder and with more errors, doesn’t have perfect memory of you via the cloud of exactly how you like things, what you like to drink,…

      • And, in fact, the robot waiter would be a whole system of restaurant sensors, a main computer hooked to the cloud, and a team of different kinds of robots. No waiting for the waitress to come around and to get her attention to get a refill, or add something; you just say, more iced tea please, and the robot quickly rolls out.

        Or, not even that, the sensors monitor your table, the main computer downloads your preferences and habits from cloud after recognizing your face, and as soon as your iced tea starts to get a bit low, or watery for you, the drinks robot rolls out and asks, would you like more iced tea? And it puts in just the right amount of lemon and zero-calorie sweetener you like. Everything is much faster, much more to your liking, the food much warmer, and there’s no 15% tip to pay, just maybe a few percent, or less, added to the prices to pay for the system.

        And the robots, always very pleasant, and cute, and funny, or interesting looking, or elegant looking, and I’ve seen studies showing that people quickly like and get comfortable with this. And human interaction, that’s from the people one’s dining with; family, friends, others in the restaurant, in the one-percenter neighborhood.

        Politics are going to decide whether we invest in the 99+%, and don’t have Elysium. What party are we going to vote for.

      • Richard – sorry I took so long to get back around to these comments.

        Let me latch onto the theme of “paying for human interaction”. I’ve never explained that clearly (maybe to myself, and not to others). I don’t think we pay waiters, for example, for the interaction. We quickly dropped bank tellers, as you mention, in favor of ATMS.

        When I say we pay for interaction, I mean that we pay to eat at restaurants, or see music in groups, or do almost anything where other people are gathered rather than doing it alone. We pay for the privilege of being around other people, and people makes lots of money charging us for that privilege. The restaurant owner earns profits by putting together a menu that makes it desirable for lots of people to eat there.

        So if we’ve got robot waiters, etc.. does that change? Well, there are not human waiters, for sure. But if there are cheap and easy ways to staff a restaurant with robots, then we’ll get more restaurants (and coffee shops etc..) run by people who think they have a good concept and can afford the lower cost. Will that replace all the waiter jobs? Probably not. But who knows how many kinds of new jobs could be created? We don’t know that.

        Ultimately, my argument is that you cannot ignore the fact that robots, by replacing human jobs, make certain goods and services cheaper. This will have consequences, and make some activities more attractive to undertake, as well as making it easier for people to purchase those goods and services. There is some GE effect here that matters. Enough to arrest the decline in labor force participation? I don’t know – probably not on current trends. But that doesn’t mean that the trend will go to zero LFP.

      • @dvollrath

        “it means we have a built-in demand for being around other people. A demand that we routinely pay to have supplied. We will always find ways to pay other people to interact with us.”

        one Hundred Thousand Hermits Throughout History* beg to differ.

        While those hermits can find acceptable means to thrive today, will they still be able to in the robo-future? (It’s easier to tolerate unnecessary social interaction if you love your job. If your job is just to make ends meet it’s much more difficult.)

        My apologies for the alliteration. It was unintentional until I noticed it happening.

        Seriously though, you and every one else (I’m looking at you, anthropologists) who says how we are social animals needs to learn a bit more about the psychology of individual differences. There’s more diversity in sociableness than you think.

        “But that doesn’t mean we won’t spend lots of our time “working” for each other doing other things. Whether that work is paid in wages or not is immaterial.”

        But whether it’s something you enjoy or hate is not.

      • As some one who tends to hate crowds, I get your point. But there were hundred thousand hermits. There were billions of social humans. My guess is that the modal person prefers groups. But I’ve got no hard evidence to back that up.

  9. “Weak robo-optimists use Strong robo-pessimists as their straw man. Weak robo-pessimists use Strong robo-optimists as their straw man.”

    This is a tremendous observation. This straw-man-symmetry has been going round in circles for a while, and by categorizing it in this way we can recognize it and break out of that particular dead-end=loop of discussion.

    personally I’m in the “i don’t need work, i need {money/products/resources}” camp. painfully obvious to me, especially if you consider that the pessimist arguments were made when the 12 hour day became 10, then 8 ,,.

    • It seems to take us a long time to appreciate the advantage of declining labor inputs, at each step along the way (12 hours, 10 hours, regular weekends, regular vacation, retirement, etc..). The reaction tends to be wariness that we are doing something wrong if we don’t work as much.

  10. Two observations:

    The first one shows my age. i can remember George Meany or Walter Reuther (can’t remember which) deploring the “curse of automation” on the evening news. So, a mark to those who have noticed that this problem, if it is one, has been with us for quite a while.

    The second observation is from the same period as the first. Yesterday, I was reading Anne Carter’s* “Structural Change in the American Economy” (1970), which compares the 1939, 1947, 1958 and partial 1961 input-output tables of the US economy and concludes that, in 22 years, the amount of labor required to deliver a unit of “final demand” fell by about 33%.. Somehow we grew enough both to absorb that productivity increase and employ more people in absolute terms. Strong pessimists, it seems, would have to explain why continued adjustments of this type are unlikely.

    And who is Anne Carter? For many years, before becoming a professor at Brandeis, she was Wassily Leontief’s Director of Research at HERP. The person who recommended her to Leontief? Robert Solow.

    Like Solow (and the same age), Carter is still a working economist, serving on the editorial board of the International Input-Output Association, an organization she helped to found. The robots haven’t caught up to either one of them.

    • Good stuff. There is no question that you can trace backwards over history the continual worry about “losing” jobs that cannot be replaced. And yet that has not happened. I will give Richard’s post credit for linking to the changes in labor force participation, which has seen some secular changes over time. If there is evidence of “losing” jobs, this is where you’d look.

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