Automation and Exponential Growth: Not a Problem. Until it is.

 

Four years ago I wrote about the concern I had about automation and the problems it would cause to society.  It seemed as logical then as it does now that at some point computers and machines will be able to do every task better and more efficiently than humans.  Since then, I have noted that many prominent academics, like Stephen Hawking, have come to the same conclusions.

Yet despite being in good company, I have had a very difficult time convincing others of this obvious and serious obstacle.  I often run into some variation of rebuttal in which I am simply making the luddite fallacy.  The idea that technological change will result in long-term unemployment has been made for over 200 years.  And like the hundreds of prophets who have predicted that ‘the end of days is coming,’ anyone who has made the prediction the ‘end of work is coming’ has been wrong. While technological change might result in some short-term unemployment in that industry, the long-term effects to society have always been beneficial to society.

Given the history of technological change and the skepticism by many of my colleagues, I have often seriously considered that I have been wrong.  But using the past to predict the future is not always an effective strategy.  In a related example, an individual concerned about the jobs of horses[i] may have been concerned about the invention of the ‘horseless carriage’ (car) and the tractor.  Individuals trying to assuage those concerns could have pointed to the fact that technology in the past had only increased the number of job horses had.  The horse population boomed with the advent of every new technology; that is, until they didn’t.

But why have people had such a hard time with the argument that technological advancement is a growing concern?  I recently came to an answer that I think helps to explain it.   Consider the following simple problem:

A lily-pad on a pond doubles in size every day.  After 100 days the lily-pad will completely cover the pond.  On what day will the lily-pad cover 50% of the lake?

Did you answer it?

Was your answer 50 days?

Well if so, you are wrong.  The correct answer is day ninety-nine.  Don’t feel bad, the above problem deals with exponential growth, something that humans have a hard time intuitively grasping.  The question above is relatively easy but produces an intuitively wrong answer.  A related problem is used on the cognitive reflection test, a very simple task that has good predictive power in explaining a variety of cognitive abilities.

Now imagine you told someone that the lily-pad was going to cover the pond after 100 days.  On day 90 it would only be about .1% of the pond.  Trying to explain to someone that has been watching it grow every day, that in 10 days’ time, this little lily-pad that has barely grown at all, will cover 100% of the lake would be laughable. People who were warning others about this problem since day 1, would be told just how wrong they were, that is, until they weren’t.

This same intuition may be responsible for why so many have difficulty accepting the growing concern of automation and technological unemployment.  Although human potential and technological improvements are very difficult to properly quantify, we know that processing speed  has been increasing at an exponential rate[ii] and serves as a good proxy for technological advancement.  We may not know just how far away we are from ‘Day 100’ (e.g. a time when computers and machines can do every job better than humans) but we know we will get there. And just like the lily-pad, technological speed and subsequent technological unemployment will grow exponentially.  With each doubling the associated problems also double. Past unemployment problems associated with automation and technology may have seemed small because they were but they will only continue to grow, exponentially.

We need to recognize that with exponential growth, problems don’t seem like problems, until they are.

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[i] Of course, humans aren’t horses. We are smarter and can learn to do a variety of complicated tasks.  But that only means that it just takes a more advanced technology to replace human employment. In addition, although horses may have seen a huge drop in their ‘employment’, the overall quality of life for the typical horse has dramatically improved.  Horses are often fed, sheltered and given healthcare.  We don’t simply stop caring for horses because they are no longer useful.  This is similar to the premise of universal basic income.

[ii] One possible point of contention is that that Moore’s Law (exponential growth of processing speed) is only an observation not a rule.  There may be a point in which we start slowing down in technological advancement. On the other hand, we may start speeding up as well. Regardless, as long as technological advancement doesn’t come to a stop, we will still reach a point where  technology can beat humans.

Pictures taken from: from http://www.aptinex.com/images/articles/industrial3.jpg

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The Myth of the American Dream

“Some people are born on third base and go through life thinking they hit a triple.” – Barry Switzer

American Dream 1

A number of years ago a friend of mine had a full athletic scholarship to play baseball at the University of Michigan.  While exceptional at baseball, he also was quite bright and would likely have been successful even if he didn’t make the Major League.  However, as he was playing baseball, just few weeks before he was set to head off to Ann Arbor, the ball came off his bat and hit him in an unprotected part of his head, leaving him with significant brain injuries.  Unable to play baseball or go to school, he has now spent his life as a dishwasher and doing other menial tasks to make ends meet.

Individuals in the United States are brought up with the national ethos of the American Dream: the belief that we are all free to prosper and succeed. However, the belief in the American Dream is predicated on so many faulty assumptions that it has undoubtedly caused harm to so many.  Like the situation of my friend, each and every one of us is equally the result of a vast array of seemingly random, or at least unpredictable, processes that shape our lives from the moment we are born.  Circumstances that we do not choose shape our lives in drastic ways and result in vast inequalities before we ever begin.

Walk into a few schools in your city of varying socioeconomic status.  By the time school starts, children from poor households are already behind those from more wealthy ones.  Of course, this difference isn’t the fault of the child and in many cases it’s hard fault the parents. Parents in these households surely couldn’t, as easily, afford additional learning tools, like books and may have to work long or odd hours to provide for their family limiting the amount of time they could spend. These differences simply compound overtime. How can we believe in the American Dream, when we know that children are so disadvantaged before they get started?

What would a country where the American Dream actually existed look like? To begin, each and every individual would have the same chance of moving upwards and downwards.  For example, if we split income into quintiles, 20% of those in the bottom fifth would make it to the top fifth and 20% of those in the top fifth would fall to the bottom.  Instead, only 6% of those in the bottom make it to the top, while only 7% who started at the top, end up in the bottom.  Similarly, 43% of children born into the bottom quintile remain in that bottom quintile as adults and 40% of children raised in the top quintile will remain there as adults – and this problem is only getting worse.

What’s more, is that America has one of the worst levels social and economic mobility.  For example, the best country in terms of social mobility, Denmark, only 25% remained in the bottom fifth and 15% climbed into the top.  Despite this, Americans have the strongest belief that they live in a meritocracy.  When asked whether people get rewarded for their efforts, Americans answered at near 70% while the median across 27 other nations hovered below 40%.

American Dream 2

Indeed, one’s family income and status play a huge role in determining where one will end as demonstrated above, but it is not the only factor.  At the moment of conception, our genes have set the stage to explain a considerable amount of the variance in success.  For example, we know that height plays an implicit part on our judgments of others.  We see taller people as having better leadership qualities, being smarter, whether or not it’s true.  On average, every inch is worth an extra $800/year. This may not seem like a lot, but on average, someone who is 5’5 will make about $6000 less per year than someone who is 6’1.  For all we hear about the differences in gender inequality, height actually makes a bigger difference.    And that only touches on one aspect of success:  income.  Other research has demonstrated that when it comes to attracting women, making friends, or being looked upon as a leader, for example, a man’s height plays an even greater role.  For example, 80% of women say they’d rather date a man who over 6 feet tall and eHarmony will only match women with taller men due to complaints about being set up with shorter ones.

Cultural circumstances play a similar role.  Note that in 1931, Adams defined the American Dream as one in which “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement…regardless of the fortuitous circumstances of birth or position.”   And yet, this was said at a time when overt prejudice and discrimination was being applied to various races (e.g. African and Asian Americans) and women.   While certain leaps have been made with regards to explicit suppression of certain races, cultures, and genders, we still have a long way to go before we resemble anything like the American Dream.

An entire book could easily be dedicated to the way initial genetic and environmental circumstances influence one’s success.  Income, education, mental health, race, gender, diseases, location, and attractiveness are just a few of the obvious uncontrollable conditions that affect one’s life.  Couple that with a life of other relatively uncontrollable events such as injuries or new diseases and it becomes painfully clear that success is not doled out in some idealized meritocracy, but rather are the result of more fatalistic processes.

And yet, so many take the view that our successes are our own. Interestingly, when bad circumstances plague us, we’re likely to blame external factors; a bias in psychology known as the correspondence bias.   More importantly, however, we don’t grant the same belief to others. Rather, we typically take the view that one’s failures are their own.  Poor, homeless, and/or unemployed individuals are denigrated and told to fend for themselves without any sympathy or acknowledgment that anyone born into a similar situation would be in the exact same spot.  Increasing amounts of suffering are inflicted on people due to circumstances outside of their control.

This problem is further compounded by the fact that this belief actually hurts all of us.  Recent work by Richard Wilkinson and colleagues have noted that as inequality increases so do health and other social problems – across all levels of income.

For example, consider that it is more expensive to patch up the problems associated with homelessness, than to simply provide them with homes and other basic necessities.  Shelters and emergency health care are way more expensive than what it would cost to simply provide basic housing.   Estimates put the average cost currently between $66,000 and $134,000 compared to $10,000 and $25,000. Think of the good that could be done and the money that could be saved by simply recognizing that some people got dealt a rough deck and providing them with a real chance to make the best of it.

Another obvious inefficiency is what we spend on criminals and imprisonment.  On average, it costs over $31,000 per year to imprison a single individual which amounts to near 50 Billion dollars across the U.S., and this doesn’t take into account the billions of dollars spent on court fees and police[1].   More importantly, the U.S. dwarfs other countries in how many people we incarcerate; 2 million people, compared to the next country China with only 1.5 million people (which has about 3x the population).  What is responsible for such a high rate of crime? Surely, U.S. citizens do not carry some innate ‘criminal gene’ and so one can only conclude that a host of environmental and cultural factors are to blame.  Terrible drug policies and systemic racism surely play a part (and two more reasons for our non-meritocracy). But more vital is the fact that the U.S. fails to help those who are least fortunate – setting them up for a life of crime.  Ironically, when crime goes up, the gut-level reaction is to increase police and jail sentences, but that only costs more money, which in turn results in the need for cuts and important social programs are often the first to go.  Imagine what states could do with the billions of dollar we spend on police and prisons if instead, we only helped to provide for those who felt they needed to turn to crime to survive.  More teachers, better schools, free tutors, supervised after school programs – simple changes that would have amazing ripple effects to both lower crime, save money, and promote the wellbeing of so many.

I could go on and on.  One final example, the average student loan debt for going to college and university is $29,400 – but this also factors in the 30% of people who have their way paid for by a wealthy family or some scholarship; suggesting the total amount for people who pay their own way is much higher.    While most people have to pay for their education; those who have families that front the costs – save on both the amount to pay back the debt and the insane interest that comes with it.   More importantly, those individuals who have to pay for their entire education, likely need a job to pay to supplement their student loans, while those who don’t are free to spend their time on additional studying or taking part in worthwhile extracurricular activities; setting themselves up for additional advantages down the road.

“No man is an island entire of itself,” wrote John Donne.  Even those who are least fortunate still benefit from those around them, social services, as well as the many important people that came before.  But for others, their early advantages dwarf any benefits provided by any country’s social system.  The mantra “you can do anything you set your mind to” is only true for a select few.   Like individuals born with dwarfism who want to be NBA stars, some goals are simply out of reach from the moment some individuals are born.

I’ve worked hard and it feels like my successes are my own. But they aren’t.  I’ve been lucky to be born into a well-to-do, two parent household and the benefits that has provided me have been incalculable. For example, I recently won a prestigious scholarship for graduate school, partially as a function of some research I did in my undergrad.  The research position was unpaid and I was only able to do it because I didn’t have to worry too much about finances.

Whether I would have come to terms with this would be debatable had I not had the opportunity to see the other side first hand.  My girlfriend has had a tough life.  Born with not much, a father who passed away relatively early, and a mother with mental health problems, she’s had to work tirelessly to get where she is.  She is now a teacher and an amazing one at that. But if it weren’t for the benefits my parents had provided me and now transfer to her – she would be scraping by, likely unable to fulfill her passion.  Needing to use my car to get from school to school for her substitute jobs[2] as well as some additional resources to live (substitute jobs are hard to come by, at least at first), it is doubtful she would have ever been able to become a teacher, unless she could convince the bank to give her a loan; one that the bank would see as risky and thus extremely high in interest.

The American Dream is currently only that: a dream.   While the idea is beautiful, its execution has been disastrous.  That anyone can do anything is a wonderful belief, if true, but things shouldn’t be believed simply because we want them to be true.  Through this belief we have degraded and vilified those who do worse than us, believing that those who do worse are actually worse. This idea that people deserve what they get and that failures and successes are due to some inherent disposition[3] and not due to a wide variety of situational factors leaves us only to blame and disparage, rather than help and motivate.

The American Dream remains a myth, but it doesn’t have to be.  We can restructure our society so that we live up to the initial visions put forward by Adams and others.  We can live in a world where ‘life can be better and richer and fuller for everyone, with opportunity for each according to ability or achievement, regardless of social or circumstances of birth.’

[1] It is approximately 40 billion for 40 states, so I extrapolated to 50 billion for 50 states.

[2] In Canada, one has to put in over a year on the substitution list before they can become even a long-term occasional teacher.

[3] Even it is an inherent disposition, it is still arguably not ‘fair.’  Like the person with dwarfism and his dream to be an NBA basketball star.  This problem is a much harder one to solve and as long as their is genetic variance – it likely won’t be.

Hudak’s 100,000 job cuts is a terrible political move

Who is Hudak’s team of advisors? They should all be fired because anyone who lets a politician publicly state that they want to cut 100,000 jobs deserves to lose theirs.  I don’t even want to comment on whether or not it’s actually a good idea for Ontario (I’d argue it’s not), but let’s examine how dumb a political move it is.

For context, Hudak has suggested that he will create 1,000,000 jobs and part of this plan involves cutting 100,000.   Let’s ignore the fact that in Ontario there are only 560,000 people unemployed, so I’m not sure what or who the other 300,000 to 400,000 jobs are for.  Let’s just talk strategy.

There are 650,000 public sector works in Ontario.  That means that while 560,000 people might be motivated to vote for Tim Hudak, there are 650,000 motivated not to.  Sure only about 1/6 will lose their jobs, but who’d take their chance?  And Right there, we’re at a net loss of 90,000, and some multiplier more, if we also assume that close friends and relatives will have similar motivations.

Further, people have a tendency to prefer avoiding losses than they are to acquiring gains, which is exacerbated by the awareness that cuts are easy, creating jobs are hard.  This leaves the motivation, one-sided.    While many may be eager to have a more fiscally responsible government,, public service jobs serve the public (it’s right in the name).   People typically don’t want to give up their firefighters, police, teachers, nurses, etc.   Remember that loss-aversion problem!

Wynne has also done a good job exploiting that, citing cuts have consequences in response to Walkerton.  Although, one might argue that it’s a little disingenuous, as much of the fault lies with 2 managers, the Walkerton report explicitly lays out that lax regulatory oversight as a function of cuts was also a huge factor attributable in large part to the hasty budget cutbacks of the early Harris administration.  An ounce of prevention is worth a pound of cure! 

But maybe I’m wrong.  Maybe people are really motivated to save that 2% and are persuaded by the fact that it will somehow help balance the books.  Rob Ford got elected on stopping that gravy train!

What’s Our Economic Endgame?

What’s Our Economic Endgame?

Talk to a parent about their worries and you’ll probably hear, “will my son or daughter have the same kind of opportunities I had? Will they be able to find a job, raise a family?” Ask them about their hopes, and you’ll probably learn that they want their children to have a better future than they had.

It’s cliche, but the want for a better future, seems to be nearly universal.  This ideal of a better future, usually comes in terms of economics.   These economic concerns, however, come with such vagueness and no real attempt to understand current trends or to make speculations of where they will go.

This post is an attempt to look our world, how it is developing and where that will lead.  Discussion on this topic is made all the more salient and vital, with the Occupy movements around the world echoing their displeasure. People aren’t happy, they feel mistreated, and simply feel the economic system has let them down.  While there are political and economic reasons, being cited as the causative problem,  no-one has bothered looking at the technological trends that have led to this point.

Economics is a science of scarcity.  For the first time ever, many first world countries , don’t have that problem – but instead have a problem with distribution. For example, there is more food than we can eat, but yet still some people have to go without eating. Technology has increased our productivity so that in certain areas, we are able to produce more than we need, cheaper, faster and with less people.  GDP is at all-time record high.  It may have stagnated the past few years, but the world is producing much more than it did 10 years ago (58 Trillion (2009)  vs. 33 Trillion (2002). This increase is seen in virtually every country, even Spain and Greece (See here).  The question then is if every country is producing more than they did 10 years ago, why do so many people have less?

Well one answer is that companies can’t sell more than people want to consume. And if people are already consuming as much as they can or want; then there are is no need to hire more people to produce more.  That coupled with technological advances,  it takes fewer people to make more, compounds the problem.  The world is becoming more and more automated.  Now travel agents are much rarer if not virtually extinct, news industries are endangered, big businesses are going bankrupt and the United States Postal Service is suffering. As computer algorithms become more elaborate and engineering becomes more precise, what will happen? Simply stated Production will continue to increase as employment continues to decreases.  Despite the accepted fact that technology makes production more efficient, people generally fail to consider the obvious logical conclusion.

Consider the following thought experiment: I call it the robot paradox

Regardless of whether you believe in an eventual true AI or not, it is not unreasonable to think that our technology will progress to a point where technology can do virtually anything a human can faster, better, and cheaper.   We already have a computer that can beat the best Jeopardy players (with goals of ‘helping’ out doctors), and a program that can write sports articles, with plans of expanding it’s subject area (“those clowns in congress did it again, what a bunch of clowns).  Humans will be outperformed by technology, in virtually every domain. Herein lies the paradox – what are humans to do, when technology can outperform them in everyway? No matter how well educated or skilled you are, there likely won’t be a job for you to do.

And as we move toward that point,  it is not difficult to see a world in the near future, where many jobs are replaced by computers and robotic devices.  Grocers are already being replaced by efficient scanning machines.  It won’t be long where you can just put your food on the belt and the machine will scan it and slide it into a bag for you, or perhaps a scan as you go device that scans things as you put them into your cart; which already exists; Or how about fast food moving from ‘automated’ burgers  or coffee to truly automated burgers and cashiers. Other jobs are already semi-obsolete, but are ‘just waiting’ for the culture to change. For example, bank tellers are rarely necessary and typically serve older individuals not comfortable with a machine handling their money.  However, we will undoubtedly see cuts to those jobs as individuals become more comfortable with technology.

But the question is:  is this a bad thing?  Not if we prepare for it.  This could be a future where people pursue tasks that give their life meaning, while computers and robots take care of those ‘little things’ (like food, shelter, manufacturing etc.). That sounds like my utopia.

Given our current economic policy, however, this future is daunting.  A future where either you own a business, have one of those few select jobs that robots can’t do  or you are unemployed; unemployed being the strong majority.   What needs to be realised is that we must begin moving from our current system which says that says everyone can work, the best just get paid more; to a system that says there just aren’t enough jobs in the world for everyone and more importantly there never will be.  It is a difficult transition, but it needs to be done.

The developed world is faced with staggering unemployment rates that are causing problems for many families and individuals. Although we live in a time where we produce more than we ever have, there are still many who don’t have enough.   Don’t get me wrong, I don’t think that we are at the point yet where we have to have too few jobs to go around.  If done right, there are jobs currently to be created, but unfortunately, we haven’t prepared for this properly.  For example, there is much needed in terms of R+D, infrastructure like roads, railways, and bridges, and the movement to a more sustainable electric grid of solar and wind.

The world needs to come to understand that we will continue to produce more with less and less people.  At some point we will have more than we need and even more than we want, but fewer people to actually obtain it.  Economics is a tricky system and I have simplified many of the concepts here.  I don’t have the answer, but I am trying to pose the question.  If you are worried about whether “your son or daughter will have the same kind of opportunities you had, will they be able to find a job, raise a family or whether you will be able to get a job or even keep it” then these question raised in the Robot Paradox should be your concerns too.

For the time, it seems we are content with our imaginary surplus of burning oil, tearing down/ building up infrastructure,  and a minority of us unemployed and on welfare.  We blame an economic recession, but while that may play a part, we are failing to see the bigger picture and more important trend.  Every day we will produce more than we need and with fewer people to do it, and this, by definition results in more unemployment.  Let’s face it, we’ve reached our current system’s economic endgame, it’s time to re-write the rules and play some thing else.