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Martin Ford Asks: Will Automation Lead to Economic Collapse?

October 19, 2011

Martin Ford Asks: Will Automation Lead to Economic Collapse?


Martin Ford's new book asks how automation will effect the near future of the economy.Martin Ford’s new book asks how automation will effect the near future of the economy.

Will the future be filled with cool technologies and endless opportunities or will our own creations lead to eventual doom? I tend to think the former. Technology has seemingly endless ability to improve the health, freedom, and happiness of our lives. Even optimistic futurists like Ray Kurzweil and James Canton admit, however, that the road to advancing technology is fraught with dangers. Super viruses, artificial intelligences run amok, environmental calamity – science has its threats as well as its promises. Yet there could be one near term problem that even futurists tend to ignore – economic collapse. Martin Ford, a silicon valley computer engineer, entrepreneur, and blogger has written The Lights In The Tunnel, a book which explores the economic implications of a world which is becoming increasingly automated. Ford proposes that in the upcoming years robots and computer programs will edge human workers out of their jobs and that unless we take drastic actions this will reduce mass market purchasing power, destroy consumer confidence, and shut down the global economy. Ford has the reader envision these changes during a thought experiment where lights in a tunnel represent purchasing power in the mass market (hence the title). Even after discussing the book with the author, I’m not convinced that The Lights In The Tunnel is an accurate prediction of our future, but I wanted to spread the question: what does increased automation mean for our economy?

It’s hard to deny that robots and computers will eventually take over for humans in many industries. Already we’ve seen how robots like the Flexpicker and Adept Quattro excel at sorting and moving goods in a manufacturing environment. More humanoid creations, likeKawada’s Nextage or Honda’s ASIMO, could take on even more human-like tasks. And then there are the software programs. We’ve recently showcased how sports journalists and other news people could one day face serious competition from virtual writers and performers. Everywhere, automation is progressing and taking over more jobs. Even vending machines are starting to eliminate the needs for some human workers.


Is the Fallacy Itself a Fallacy?

Yet even as technology removes some jobs, it creates others. For every worker taken off the assembly line there’s another added to the maintenance team, or two who become consultants. We’ll never automate away all the jobs, will we? Depends on how advanced the machines become.

Back in the industrial revolution, a group of English textile workers protested the use of mechanized looms. These were the Luddites, who believed that jobs lost to machines would lead to economic ruin. Obviously they were wrong. From these protesters modern economists have derisively coined the Luddite Fallacy – the belief that labor saving technologies will increase unemployment. That fallacy is one of the key issues debated in The Lights In The Tunnel (here after TLITT).

In TLITT, Ford argues that the Luddite Fallacy will only remain a fallacy so long as human capability exceeds technological capability. That is, as long as humans are able to improve faster (or as fast as) machines, humans cannot be fully replaced. Ford worries that we’re approaching a point where machines will exceed human performance to such a degree that the Luddite Fallacy will fall apart. Once a superior automated workforce is created, it could take over a large portion of the jobs in our global market.

Much to Ford’s credit, he considers the implications of technology far beyond the loss of manufacturing jobs. TLITT emphasizes that many high paying positions (research lawyers, software engineers, radiologists, etc) could be automated before more mundane ones (mechanic, housekeeper). Specialized fields with algorithmic approaches to problems can be synthesized. Already, the US and many European countries outsource tech support and similar positions to India. Eventually, Ford argues, they’ll be outsourcing positions to computers.

TLITT goes on to predict some pretty awful results from this widespread automation. With few high paying jobs, there will be less people able to buy goods. Sure, a few robotics corporations and software companies will create a new generation of trillionaires, but the number of consumers with middle class purchasing power will diminish. People will sense that purchasing power is dropping and consumer confidence will also decrease. Eventually all the wealth will be consolidated in a relative few, but with no one to sell to, those wealthy will struggle as the economy continues to wither.


While Ford proposes a good thought experiment, and pulls no punches as he explores all of its implications, I don’t think his assumptions can go unchallenged. First, there are jobs that may never be automated, or even if they could be, consumers will want humans in those positions. Artists, counselors, public officials, entertainers, teachers, and others provide a “human touch” in their work that is unlikely to be achievable by any but the most impressive of artificial intelligences. If such AI comes to exist, the economy may be the least of our concerns.

Second, we may simply transition away from production and service jobs. Just as the bulk of our workforce has shifted from hunting/gathering to farming to crafts to manufacturing to service, it could continue on to entrepreneurship. Owning capital, and developing it, could be the job of the future. Already we’ve seen how open source projects can help you become a mini manufacturing, information, software or robotics mogul. These trends could continue and define the future economy. Or, even if they don’t, we could all heavily invest in public robotics (and software) companies, thus owning the capital of those firms and spreading the wealth.

Finally, while Ford’s “lights in the tunnel” thought experiment is logically sound, it doesn’t come with a lot of numerical evidence. TLITT includes a reasonably enlightening discussion on the slave economy of the Confederacy during the US Civil War, but otherwise dodges finding historic proof for its assumptions. To some degree I understand: the looming global automation would be unprecedented. Still, I feel like the predictions that Ford asserts should come with some sort of hard evidence.

The author was gracious enough to correspond with me and address my concerns. (He was also patient enough to help me understand the important distinction between industrial and end-user consumption.) Ford’s responds to my first critique by pointing out the sheer number of jobs that could be replaced by automation. He has a table on page 59 of his book that describes the largest occupations in the US. The top positions (sales people, cashiers, office clerks, and food preparers) represent millions of workers, none of whom need a college education. The list goes on to describe other positions which could all be automated. Ford asks, can we really expect all of these people to become artists, and performers, and counselors and teachers? Would most people in these new positions get paid enough to support themselves?

As for the rise of a new capitalist society full of entrepreneurs, Ford’s already had that debate before. He and Robin Hanson (a blogging economist) have discussed that very idea (and other ideas presented in TLITT) in various posts on their respective blogs. Can we all own enough shares of a (robotics) company to replace a general lack of employment income? Hanson implies yes while Ford worries the answer is no. You can catch Ford’s first critique of one of Hanson’s academic papers here, Hanson’s response to that critique here, and Ford’s retort here. It’s hard to summarize the eventual tone of the debate, but I think it boils down to: technophiles don’t adequately understand the market (Hanson) vs. automation will cause disruptions that the market may be unable to compensate for (Ford).

The Cure (and other fantasies)

Ford doesn’t leave his readers with just another doomsday scenario, he does his best to find a solution. No, he doesn’t think we should (or perhaps even can) avoid automation. Instead, TLITT explores some pretty radical ways that we could put purchasing power back in the hands of the masses and create non-traditional jobs with economic incentives. He speaks of ‘recapturing wages’ by imposing capital/labor taxes on industries as they automate, and value added taxes to goods as they become cheaper. These taxes should not be large enough to discourage automation, but they could (Ford proposes) provide revenue for a new kind of job.

Ford’s ‘virtual jobs’ are incentivised programs that would reward people for pursuits such as education, civic service, journalism, and environmental responsibility. These jobs would be paid for by the state through the revenue gained through recaptured wages. Those who accomplished more in their virtual jobs would receive higher wages, thus providing the financial incentive that everyone needs to feel like they are really working. There would be some industries and some workers that exist outside of this new system, and plenty of space and encouragement (Ford says) for entrepreneurs, who would still have the most potential for monetary gain.

So, to paraphrase Ford’s solution in my own words: we should take money from automating industries to fund a state guided program that gives money to consumers in exchange for working at bettering themselves. Sounds like a decent plan. Never gonna happen.

The US is freaking out simply at the mention of socialized healthcare, socialized work would be dead on arrival. Maybe when 75% of all jobs are automated (the level supposed in TLITT), the governments of the world will see the benefits of such a system, but even then I doubt it. Ford’s solution requires that the wealthy consent to (or that the public impose) increased taxes to avoid economic ruin. I think that those institutions (or people) in the business of acquiring wealth would sooner face ruin than impediments to their financial gain. Even if everyone wanted to switch to such a system, the scope of the change is monstrous.

But then again, so were the changes brought on by the Agricultural and Industrial Revolutions.

For all my critiques of TLITT, I find myself unable to completely argue it away. Automation is increasing, and the economic fall out from that change could be disastrous. Or it could usher in a utopia. We don’t know, and not knowing could prove to be fatal.

After talking with Martin Ford, I’m most impressed with one aspect of his book: it asks a question few seem willing to contemplate. Even if there always are enough jobs for humans, even if a superior automated workforce doesn’t cause economic disruptions, I still think discussing and debating the possibility is an important task. I encourage you to pick up a copy of The Lights In The Tunnel and consider the scenario it warns against. Then add some comments below to get the discussion going. In order to reap the benefits of technology we have to stand ready against the possible threats that it presents, whether or not they ever arise.


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