Catering robots and AI bank officers; burger frying machines and touch screen customer service droids. Bed sensors and roaming air sterilizers. Is America giving up on work just in the nick of time?
On 23 SEP 2020 The Socratic Review published an essay entitled Why Universal Basic Income Could be the Salvation of Capitalism. The focus of that piece was centered on the value of Universal Basic Income as a hedge against changing work needs and employee demographics as were explored in Andrew Yang's book "The War on Normal People". But what has happened in this area in those nearly eighteen intervening months? Has a grim picture developed where technology, automation, artificial intelligence, and globalization have left millions unemployed, and more importantly, unemployable?
Although we are not yet in a post-labor world, the last several months have shown how quickly that era is approaching and how oblivious many governments are to the encroaching crises.
In a recent article in the tech journal, Rest of the World entitled The vaguely dystopian technology fueling China’s Olympic Games, Meaghan Tobin takes us on a tour of the Olympic "Bubble" in Beijing where a wide variety of prototypes in automation are on display. Whereas it is tempting to look at these innovations as "World's Fair Futurism" the reality is more prosaic, namely, high-functioning robots are a much better value than wage employees for businesses, and always will be. I am not pursuing an ethical question here. It is pointless to debate the value of work, or the plight of the unemployed, especially in free societies (which China is most assuredly not) in the face of simple economics. Perhaps it is even more alarming when you consider China is a nation with a lot of inexpensive labor, rural poverty, and is still developing high-functioning robotics and parading them to the world.
There are dystopian undertones in these developments to be sure - namely in the areas of privacy and surveillance, but not in the so called "obsolescence of work," which is perhaps mathematically foreordained. In an exponentially growing population, it would stand to reason there would eventually be a tipping point where there would not be enough jobs for the populace. Add to this the perennial problem of not just having enough jobs for everyone, but having the right employees to fill the right jobs for everyone.
Since the industrial revolution, where self-sufficiency gave way to wage labor, this has been an accruing problem. With each up-tick in technology, human labor has given way to mechanized labor, and not just in blue collar occupations. How many telephone switchboard operators do you know? Typists? In-house stenographers? Even the bookkeeping and accounting professions have seen a precipitous drop in the need for clerical help in the face of multi-posting and user-friendly accounting programs.
It's tempting to see this oncoming revolution as primarily affecting "burger flippers" and "assembly line workers;" but this is not the case. In The Socratic Review Global Tech & Finance Report for 15 FEB 2022, we ran a story from The Korea Herald entitled KakaoBank to launch AI mortgage service. In this piece, new technology (due to go live on 22 FEB 2022) will allow customers to solicit mortgage loans of up to around $500,000 via virtual bankers swiping left and right on their phones. It doesn't take much imagination to see this technology moving into every other type of lending (especially car loans) and thus eliminating more loan underwriters. And this is even before we apply the same concepts to insurances of all types and their underwriting.
Artificial Intelligence will continue to peck-away at human based analytics because it's faster, has a better memory, and will, in short order, be able to adjust its algorithms by pure mathematical observation. This growing trend will effectively shift portions of the financial sector far beyond loan and insurance underwriting into markets, securities, and commodities. Programs looking at climate and weather data, food eating trends, yield per acre, relative cost of shipment, and any number of other factors, will have incalculable impact on commodity markets and consumers, but even more so on the thousands of human beings currently employed in guessing many of these very indices based on historic then predictive data. When we have large corporate farms reporting real-time growing conditions to centralized data centers, real-time sensors reporting real-time produce sales from local stores, real-time tracking of every ounce of produce, whether in truck, train or ship (let alone in your very own refrigerator) with highly accurate and instantaneous results, there is no way human beings can possibly keep up.
But this is only food and commodities, how about something more prosaic like real estate?
Perhaps no industry is more tied to the heartstrings of the American Dream than Real Estate; buying a home is not only a large purchase and a life changing decision, it is also one that has relied heavily on the charm, knowledge, and expertise of a professional realtor and other associated professionals such as title abstractors, title clerks, mortgage brokers, loan underwriters, appraisers, home inspectors, etceteras . But for how long will this relationship persist? In my opinion, not very long at all. Sometime in the very near future, a real estate disruptor is going to revolutionize the residential real estate business with the agent-less discount listing and here's how I see that working.
One Sunday you notice that the prices in your neighborhood are up 15% but the prices in another neighborhood 2 miles away are down 10%. Seeing the opportunity (and knowing that the neighborhood in question is dicey but livable) you opt to list your home for 20% over the current value. That same day, a drone/droid team arrive at your house from Disruptor Realty. The drone photographs your entire house inside and out, automatically applying filters that remove the furniture, cut the grass, tidy-up the house, etceteras. These photos and the listing are uploaded immediately. While all this is happening, the droid puts in the removable security cameras that you will control from your Disruptor Realty app, and installs the retina scanning and finger reading front door key box. Hereafter, anyone who looks at the house is immediately recorded, tracked and followed-up on, let alone being watched the entire time they are touring the house.
A few days later, someone expresses interest in your home, and thanks to Disruptor Realty's pre-qualified mortgage program, the buyer has already been underwritten and approved for the mortgage, likewise a house in that neighborhood two miles away is available and basically, since all the pre-qualification and underwriting has already been done (to include a title search) - you and your buyer are able to settle in about a week since Disruptor Realty and its AI applications have prepared all the documents, notified the pertinent utility companies and tax agencies, queried the banks, and opened its escrow accounts electronically, and even in crypto currencies if you prefer. In fact, Disruptor Reality offers even more services than a traditional realtor, and can even make new keys for the house and send their specifics to you in a text message so you can make copies of them in the future.
Far fetched? Every single piece of technology described in this scenario already exists; the only thing lacking is will and execution. Whereas some folks will probably hang-on to traditional realtors for a while after Disruptor Realty gets started, it won't be for very long because thanks to Disruptor Realty having only fixed costs (payments on its AI systems and upgrades and minimal office space) it can execute its sales for 1% of the sales price and make a huge profit; a larger profit in fact than maintaining the current real estate business' infrastructure. With a 5% difference in agent commissions, few folks will remain loyal to their local realtors. And beyond real estate. Who is going to want to deal with stock and bond brokers, or that infrastructure when AI completely eliminates those jobs?
So where does all this leave society and its workers? What will we do to support ourselves and our institutions as work as we have known it dries up and blows away?
There are indicators that some portions of the workforce are already responding to these trends. In a piece entitled A Nation of Quitters? by Peter Suderman recently published in Reason magazine (and featured in the 15 FEB 2022 edition of The Socratic Review ) Mr. Suderman explores why the so-called Great Resignation may not be only about disaffected workers, but rather, a reassessment of work and what it means by a savvy workforce, and more importantly, a possible movement into self-employment and entrepreneurial enterprises. This is an assessment I personally agree with since it is one I foresaw early in the Covid-19 pandemic. It was not likely households were surviving solely on their government "stimulus" disbursements, and early on I suspected many of them were earning money "under-the-table" in cottage industries; and big-ticket purchases executed during and shortly after that time, seemed to underscore that assessment. This phenomenon is not unlike the cottage industries that organically spout up in communist countries like Cuba, when private enterprise was strictly forbidden, but still didn't stop folks from making (and selling) homemade deodorant (as an example) pressed from clam and oyster shells in their kitchen mortars and pestles. As more folks leave (or are forced) from the workplace, I expect we will see a slow and organic movement to local production and increased self-sufficiency. I think there will be a local market for many high-end handcrafts from pottery to shoes, locally grown heirloom produce, and probably more collective and cooperative local farms and community gardens.
This shift away from the traditional employer/employee relationship (or at least "traditional" as seen through a lens from the mid 1800s onward) will have a catastrophic effect on government and services. As we have discussed at The Socratic Review many times before, the vast majority of the United States' faith and credit is based on payroll taxes. When there is no one to pay or collect payroll taxes, disaster will quickly follow. But no where in government at any level, is there any serious discussion about revamping our tax system away from income taxes. Even with the "Great Resignation" this is a growing concern. To cite an excerpt from Mr. Suderman's essay in Reason - "In November 2021 alone, according to the Bureau of Labor Statistics, a record 4.5 million people, nearly 3 percent of American workers, quit their jobs. As the end of the year neared, there were roughly 4 million fewer workers in the labor force than before the pandemic." According to Statista the annual mean wage in the United States in 2020 was $71,456; at 4.5 million people, that's $321,552,000,000.00 in taxable income vanished from the tax rolls. At an average tax rate of 22%, that's $70,741,440,000.00 lost in federal tax dollars.
Personally, starving the federal government of taxes is not a bad thing in my book, but it will have a profound effect on roads, bridges, social welfare, education, interstate commerce, and many other things that the federal government has gotten its fingers into since the New Deal. Not to mention the very nature of mutual defense. Unless our political leaders start addressing this issue (and American taxpayer begin adjusting their expectations of government) we are going to wake up in short-order unable to pay even the interest on our thirty trillion dollars in debt, let alone the principal; and default will make the American experience a nightmare of epic proportions as accustomed services evaporate like a summer rainstorm.
All this need not be a bad thing. Human beings freed from work could be a paradise or a hell; the choice is ours. By applying enterprise and good humor, we could grow as a species and as a society; become more altruistic, more humane, and more tolerant. On the other-hand, if we expect the march of technology to not change our lives, if we cling to old economies and old ways of earning a living, if we keep relying on an ubiquitous (and iniquitous) government, and think the march of time is merely transitional - we will be in for a very rude awakening. Just ask your local telephone operator or in-house stenographer.
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