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New thoughts on automation

For whatever reason, it’s quite rare to find a talk so interesting you’re on the edge of your seat for most it. This delightfully happened to me recently while listening to LEK Consulting‘s Andrew Allum talk about automation.

I find the topic of automation generally quite clear-cut: I think it’s a Good that will cause a fair amount of Bad in the short term. The bad consists of major restructuring in the job market and a lot of unemployment, which makes the fear and loathing around automation justifiable – too emotional and alarmist, but understandable. The good is in the long-term effect of greater productivity, lower prices and increased availability of valuable products and services for more people. Also, better jobs.

So against that backdrop of ‘This is a non-issue’, I was happy to find a lot of new food for thought in the talk. Mr Allum stressed that he was not a futurist and did not want to speculate much on what the effect of the changes we’re seeing now might be. I however am letting my mind wander, so have your grains of salt at the ready…

Victoria Street
The Albert on Victoria Street

Long-term trend towards strengths

The assets that humans can sell in the job market come in broadly three categories: intellectual, physical and what I will call human-to-human assets. The first are used in complex fields like medicine or finance and can often be sold for more money than the other two (the creative sector excepted). Physical assets are sold to jobs that depend on the physical location of things, such as construction or transport, but I would classify things like data-entry jobs here, too. Human-to-human assets are sold in fields where the worker’s humanity is essential, such as service or care.

The emerging data on automation shows that jobs are being lost in the physical-asset category, and that in the future those will continue to be the most vulnerable. If a job is such that it does not matter how intelligent or creative the worker is or how well they can relate to others, then it has the potential to be performed by a machine or a piece of code. As a species, our comparative advantage is thus in the other categories, and the automation of physical jobs could be seen as transferring more resources to what we’re better at.

I think that sounds like a great development. More value for everyone will be created when a workforce who could be, say, inventing cures for diseases and writing great books isn’t stuck behind a counter in Tesco’s. Of course, the transition period will be difficult when people in the physical industries are displaced. I don’t think there’s an easy way around that. Another thorny question is whether most people really could be trained to be surgeons or advertising managers or other jobs that rely on medium-to-high intelligence.

Increasing individualism?

A reasonable assumption for most countries is that the government is not going to be on top of automation – not by way of regulating and not by way of automating its own processes. Incidentally public sector jobs are among the most ripe for automation: Deloitte reckons 77% of government admin roles in the UK could be done by robots. But political opposition to cutting public jobs, past record of being the last to adopt new technologies and the slowness of the decision-making process could mean that by the time the government catches up, many will have had to find their own solutions to job loss and reskilling.

There is a philosophical question here about who is responsible for the continuance of your career. I’m partial to the idea that people themselves are, but social security in a country like the UK, or especially Finland, has made the individualistic view a bit obsolete. At the same time ultimate responsibility over your own life is fact, whether or not you live in a nanny state. You can waive that responsibility or try to assign it to someone else, or, most commonly, not really think about it, but it doesn’t change the case. Finding that your job is at risk from automation and that there is no fix forthcoming from the government could, on an aggregate level, shift the culture towards individualism again. I think this, too, would be very desirable shift because it represents more freedom, and freedom is the most important precondition of prosperity.

It’s certainly justified to ask what the government will do to help re-skill people who have been left without useful skills in a more and more automated economy. But you’ve got to be prepared for there not being an answer!

Maybe the creative industries aren’t so bad

When I went to university to study languages and literature a decade ago, the prevailing view was that people like me are wasting our time and we’d be better off getting a degree in something practical like law or a vocational education in plumbing. As I remember electrical engineering was supposed to be the career with the best pay prospects at the time (and had I done that I would now have much more savings). The liberal arts graduate working a dead-end job is still a popular trope now.

But in fact jobs that you can get with those degrees – advertising, design, marketing, books, TV etc – may turn out to be the most immune against automatisation. Machines are almost by definition not creative, and so far no one can really see a way to make them so. Assuming that people will continue to have uses for creative products and services, us arts grads could finally say ‘Ha!’ to the world.

Less work, more leisure?

The most baffling rabbit hole this talk sent me down is: by the time automation is widespread, will humans still depend on work for their livelihood? Suppose there’s less paid work to go around and no fewer mouths to feed. Then lots of us will either starve, become dependants of the state or make a living some other way. Mass starving seems too far-fetched and I come up against the limits to my imagination when I try to think of a society where money is not earned and traded for goods. Which leaves state dependency as the most plausible option, if you indeed suppose that there will be less work and no fewer people. Yikes.

If that was to happen, it might well be in the form of universal basic income. Two of the countries with the highest taxes in the world, not coincidentally, are currently running trials (The Netherlands and Finland). One of the things UBI is associated with is the increasing importance of leisure in well-off Western countries, as it is sometimes seen almost as a government grant to pursue your own interests. People in Sweden and France, too, are working towards fewer and fewer working hours and apparently using the extra time for self-development, hobbies and family time, and everyone is brimming with fulfilment.

Ultimately I doubt automation will be a bedfellow of UBI or selective unemployment. The promise of automation is efficiency and optimisation, not a reimagination of everything we think we know about economics. As always, the benefits will accrue to those who find opportunities in the change. The last industrial revolution inspired new ways to work and new pursuits to spend your free time on and enabled us to grow the pie more than anyone could have foreseen. I think it’s a reasonable hope for this one too!

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