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I keep returning to this topic because I think it’s important.1 The population of talking heads in this country presumes that the current malaise in our job market has a variety of possible causes, for which politicians of both the left and right are proposing various solutions. Prominent among these causes would be:
1. The Chinese, the Indians, the Mexicans, the Vietnamese, and anyone else in a poor but aspiring country are more productive than U.S. citizens because they live in a lower-cost environment and are willing to work harder for a lower wage.
2. Businessmen are ruthless and mean, constantly seeking to exploit workers willing to take less pay and make less fuss over work rules, and so they are moving their factories to China, India, Mexico, etc.
3. Tax rates and the regulatory environment in the U.S. have dimmed the average businessman’s enthusiasm for building and expanding factories here, and so he is eager to move production to China, India, etc.
4. The recent failure of the financial institutions and pressures on the banking system have dried up loans, so that U.S. businesses cannot obtain the capital needed to build and expand factories—and create the jobs that go with them—in this country.
Causes 1 and 2—which are actually the same situation from two points of view, with a bit of Marxist venom thrown in—would seem to be confirmed by a visit to any Wal-Mart store. And yes, inexpensive consumer goods and electronics are made offshore because (1) the goods are low value and low margin, meaning that (2) at the moment it’s easier to make them with cheap labor. But we still make a huge amount of goods in this country, and many of these domestic products are high-value goods that require precision work and could support high wages.
Cause 3 has some merit, but with any offshore move the businessman faces a whole new set of taxes, work rules, regulations, and restrictions in the host country. In addition, with many countries, the threat of nationalization hovers in the background of every decision. The biggest reason that U.S. businesses move their production to China is not so much cheap labor as the foothold they acquire in the Chinese market, which they believe will be huge in the 21st century. The Chinese government encourages this view, although their stated intention is to obtain technology on their own terms.
Cause 4 also has some merit—except that businesses seem to have the cash to expand overseas, and it’s not all a gift of the host government. And offshore companies—particularly automakers like BMW, Toyota, and Honda—seem to be able to expand their operations and factories in this country.
In my view, these are all temporary situations and transitional states. For now, Chinese or Indian hands are cheaper to employ than U.S. hands. For certain classes of goods and certain services, like customer phone centers, it makes sense—economically if not socially—to employ these offshore workers. Americans as a group have too high a standard of living for anyone to employ them making, say, lawn mowers. A mower made overseas costs $250 to $350. One made by American hands would cost $800 to $900—and the utility value simply is not there. We can also see many classes of jobs right here on American soil that the average established American worker simply won’t do—pick lettuce, clear tables, scrub toilets—and so these jobs provide a foothold for newcomers to the country, who come from lower-wage backgrounds and have not yet adjusted to our pay scales and lifestyles.
For each of these supposed causes of job loss there are proposed government rules and actions: impose tariffs on foreign-made goods and services to raise their effective cost of production and make American labor more competitive; write “made in America” clauses into government contracts, so that companies will move factories back home and hire more American workers;2 make emergency government loans and stimulus funds available to banks, so they can loan money, and to companies, so they can start building factories and provide more jobs. These solutions will work for a while, they will reverse a temporary situation—but in the long run they won’t bring the jobs back.
The reality is that any job that requires repetitive movement and simple eye-hand-coordination—other than entertainment activities, like throwing a baseball—can now be done, or very soon will be done, by machine. For example, assembling the case, circuit components, and battery—all modules made elsewhere by machines—into a finished iPhone or iPad is work currently done by Chinese hands. In future generations of these products, these components will either become a single module—a circuit etched on glass—or be assembled faster and more accurately by a machine. No Chinese need apply. (For more such examples, see the references in my blogs in Note 1.)
As a general rule, any job for which you don’t need special training and which your supervisor can teach you in a morning is vulnerable to automation. Automation comes in various forms and is not always through direct replacement of a worker by a machine. Sometimes, automation involves (1) introduction of labor-saving devices and technologies that lower the number of workers doing the task;3 (2) redesign of the work environment to employ more computerization and machine interaction; and (3) redesign of the product or service to allow for more modularization and computerization of production.
For the past twenty or thirty years, computers and machines have made the average American worker more productive and therefore more valuable to the company that employed him or her. But we’re reaching a point where, instead of employing a person who knows how to operate a machine or work with a computer, the machines and computers themselves are becoming sophisticated enough—not to mention costing less, working tirelessly, and making fewer mistakes—that the person can be taken out of the productivity equation entirely.4
Outside the factory, the internet has mechanized information transfer and is putting the printing press and the local television station out of business. Computerized logistics using barcodes, Standard Industrial Classification (SIC) codes, and mechanized conveyors and routing have overhauled the processes of inventorying, transporting, and stocking goods and providing services. Computerized money-handling through credit cards, direct deposit, and other accounting systems have overhauled the way we conduct business. Yes, the bank might still employ a few tellers inside a cage, but those people are basically problem solvers; for simple transactions like getting cash and depositing checks, you go to the ATM on the outside wall.
None of these advances has anything to do with the availability or willingness of workers in China and India. When the automation wave that’s now engulfing the U.S., Japan, and Europe reaches their more distant shores, it will simply put a billion people out of work in each of those countries.
The mechanization of industry will not stop. In the meantime, as more and more goods are manufactured and distributed with inputs from fewer and fewer people, the economy has been quietly shifting to provide jobs in support positions in order to maintain the lifestyle of the average middle class person. This accounts for the growth of administrative, regulatory, and compliance-enforcement positions in the federal and local governments. They establish complicated business regulations and requirements for meeting social, environmental, and financial controls and goals. In turn, that leads to the growth of corporate jobs in corresponding support departments like human resources, information technology, environmental health and safety, communications, compliance, and legal. As companies become richer from investing in machines to achieve their production goals rather than paying the salaries of semi-skilled workers, they can better afford to pay for these “information age” jobs that support the enterprise as a whole.
However, these non-productive “information age” jobs will always be less available than the production jobs they replace. So, the biggest source of this country’s malaise is our growing idleness. More people are out of work, exhaust their generous unemployment benefits, then move on to become discouraged workers. At that point, they either apply for disability insurance for non-life-threatening injuries and mental conditions, or move to part-time, temporary, or contract and “consulting” work that meets temporary business needs but has no long-term future.
In response to the temporary rise in information and support jobs, more and more young people are studying non-productive courses in college like sociology, anthropology, gender and ethnic studies, environmental science, and English literature. While these studies have traditionally prepared students for a purely academic career, they believe the knowledge will enable them to move into administrative and compliance positions with business, government, and academia. And perhaps these jobs will endure for another generation—the half-life of the people now studying for them. But if computers are good at handling anything, it’s information. The need for human brains to churn sociological, environmental, or linguistic data will eventually disappear like the need for human hands to manipulate manufactured parts.
This economic situation is not sustainable. Not the mechanization—that can be sustained and grow indefinitely. It makes perfect sense to have machines swiftly and efficiently make society’s goods, both the basic necessities and the entertaining, ephemeral, fun stuff. And now, through the marriage of electronic communications, computerized logistics, electronic banking, and machine programming, the new automated factories can respond to individual choices, making goods in customized styles, sizes, and forms for individual consumers, overwriting the economies of scale entirely.5 All of this frees human hands and minds to do the creative work we need done.6
What’s not sustainable is the notion—borne of the Calvinist work ethic and the pilgrims’ prosperity—that the man who does not work shall not eat.7 That one must be a productive member of society in order to be worthy of receiving the food in his mouth and the clothes on his back. But in the coming age of robotics, you might as well say that a person should not eat bread unless he trod the fields where the wheat was grown, sowed the seeds, and pulled weeds with his own hands. We have seed drills and pesticides to do that work. We have combine harvesters to reap, thresh, and winnow the wheat and mechanized bakeries to turn it into bread. We have computerized inventory systems to say how many loaves the factory should make and the store should stock, and trucks routed by computer to deliver them. We have payment systems based on the electronics of credit and debit cards to help the buyer pay for the bread.
What we don’t have is something for the person to do that lets him or her participate in the economy and have the money to buy the goods on display. Perhaps, since the basis of mechanization is investment of capital rather than hiring of labor, the state should tax more heavily the gains from capital investment to support our growing number of hungry but economically useless people. (It would certainly be better than having them riot in the streets!) The only trouble is, whenever the tax burden increases, the taxed activity goes down. Taxing productive capital to extinction is not a solution in the robotics age, which is solely supported by capital.
Perhaps the government should push all the businessmen aside and simply make the investment in automation itself. That’s the approach favored by socialists. I don’t like it, however, because that sets up a central authority which defines where all investments will be made. Someone in Washington would be deciding what kind of bread I’ll eat and what model car I’ll drive and when I can have it and how much of it I get. I’d prefer some aggressive businessman trying to figure out what I want and supplying it, in competition with others who will also be figuring me out and perhaps investing in different solutions. Capitalism yields better choices for consumers.
If human minds and hands are freed from work—and who really wants to do the routine, mechanical, boring, soul-deadening, put-the-nut-on-the-bolt factory jobs?—we should find something better for them to do. Society certainly has needs that machines do not yet serve, may not serve in our lifetime, and indeed may never serve. Birth a baby, hold a sick person’s hand, comfort the dying, tell a story, sing a song, create a vision, paint a picture, teach someone to dance, carve a statue, teach someone to carve a statue, help someone carve a mountain, design a new perfume, design a new and more comfortable kind of chair, design a desk or cabinet with all sorts of clever little drawers and hiding places, invent a new kind of machine, write the code to run it, bake a really flaky croissant, grow a prize-winning rose. No matter what it is, and that some machine can make really fast, there will always be certain categories of goods and services where someone, somewhere will pay more for work by human hands and minds guided by vision and inspiration.
But we still have to figure out how to pay them. What we need—and sooner rather than later—is a new definition of what it means to be a citizen, a valid member of society, with access to its cornucopia of goods and services showered down from hard-working machines. We should at least solve that puzzle before the robots acquire their own citizenship and start voting against us.
1. For example, see my previous blogs Gutenberg and Automation from February 20 and Automation, Work, and Personal Meaning from February 27, 2011. The Gutenberg blog describes the rise of automation; the Personal Meaning blog describes the response of our economy.
2. If you think imposing government contract rules isn’t a powerful tool, consider that most of this country’s largest companies sell some fraction of their products to the U.S. government. If the rule is written expansively enough, it can change incentives for the company’s entire operation.
3. For example, as recently as about 30 years ago office settings had large numbers of humans, originally called “secretaries,” whose sole function was to answer telephones, type letters, and file documents. These were often employed at a ratio of 1-to-1 with executives and managers and 1-to-2 or 1-to-4 with average employees. Computers, email, voicemail, and other labor-saving technologies have virtually wiped out the job. Now “personal assistants” hold the position but do little that is personal and nothing menial. Instead, they have higher functions like reporting statistics, coordinating meetings, making travel arrangements, and ordering supplies on a department- or division-wide basis.
4. If you don’t believe this, watch any episode of “How It’s Made” on the Science Channel to see machines at work. In many cases, the only human hands in the video are taking semi-finished goods from one machine’s out bin and moving them to storage or to another machine’s loading bin. As soon as technology develops a robot with image-interpreting eyes and flexible manipulators, that job too will go away.
5. If you doubt the ability of automated machinery to provide for individual tastes, consider the modern experience of buying a car. Within each model line, the factory makes available units in dozens or hundreds of combinations from among choices of color, trim level, and optional features. The carmaker distributes these variants throughout the dealer network based upon what each dealer thinks will be locally popular. But if you want some other mix of trim and features, the dealer can locate it at another dealership somewhere in the sales territory and have it delivered within a day or two. If no such car exists, the dealer can order it from the factory. This puts to shame Henry Ford’s original insistence that mass production meant all Model T’s had to be black. If you can have this variation in a machine as large, complicated, and expensive as an automobile, how much easier is it to code for the fabrics, colors, and button treatments on a jacket or shirt?
6. However, even many jobs that we think of as “creative” can be automated these days. For example, where once a computer programmer labored over lines of code, inventing individual operations and then writing and proofing hundreds or thousands of individual code statements, we now have computer assisted software engineering (CASE). The programming language modularizes code fragments for specific tasks and techniques. The programmer has become a kind of design engineer, simply flowcharting what he or she wants the software to achieve, and background processes select the modules and edit them together into the finished product.
7. Actually, it goes back to the Bible, Second Thessalonians 3:10, “If any would not work, neither should he eat.” Or as my mother shortened it, when I would balk at doing chores, “No work, no eat”—although she never actually starved me.