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How Will Automation Affect Unemployment?

Posted July 24, 2010 7:18 AM

A recent book review of "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future," talks about how automation and productivity gains are cutting manufacturing jobs — not only on the shop floor but in management's ranks, too. The book, written by a Silicon Valley technologist, predicts that automation will eventually lead to 75% unemployment as the service sector fails to employ all workers displaced by automation. Is it possible that advances in automation might ruin the economy even as it saves U.S. manufacturing?

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#1

Re: How Will Automation Affect Unemployment?

07/24/2010 10:48 PM

".........predicts that automation will eventually lead to 75% unemployment as the service sector fails to employ all workers displaced by automation. Is it possible that advances in automation might ruin the economy even as it saves U.S. manufacturing?"

Yes. Quite certainly. Perhaps not 75% but likely enough to create civil and political instability in some Western democracies.

The prediction of 50 years ago that automation would reduce weekly work hours to a small fraction like 25% has not happened because owners of that technology have chosen. quite legally, to retain most of the savings for their own benefit. Further they have influenced political institutions in many ways to protect that ownership to the point of making an almost religious belief in the virtue of private enterprise a matter of common public acceptance.

This is a fact on the ground. What we do about it in the 21st century will be the essential test of western democracies who support the primacy of "free enterprise capitalism".

Oh ..... You don't like that? Then you'd best stop allowing everyone to buy assault weapons and get ready to pay more taxes to fund law enforcement. And while you're at it get off the antidrug and anti welfare bandwagon. Because if you are going to keep your skin from being hung up on the fence to dry you'd best figure out how to keep the losers well fed, comfortable and entertained.

Ed Weldon

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#2
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Re: How Will Automation Affect Unemployment?

07/24/2010 11:08 PM

go get 'em Ed! ga.

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#4
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Re: How Will Automation Affect Unemployment?

07/25/2010 2:15 AM

Indeed true. Automation should be used to relieve human from automatism, repeating handling, and ergonomic stresses caused by it and to improve quality.

IMO, Over- automatism without thinking social(ism) is not possible. We had already examples of extremes of all kind.

Who doesn't see this needs a special kind pair of glasses. GA Ed

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#6
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Re: How Will Automation Affect Unemployment?

07/25/2010 11:54 AM

I don't agree that the productivity gains have been kept by the employers, at least not most of it. The proof is that most companies are not doing better than in the 80's and many have closed. In Canada / USA, the productivity gains have been used mostly to compete against the cheaper labor in Mexico then Asia by the companies that stayed in place.

The productivity gains have also been used by the governments to expand many folds and provide more and more free services to a growing dependant population. Instead of re-training the people that were removed from their jobs, the governments is paying them to sit at home and collect welfare.

Some of the gain in productivity has also been swallowed by the too big to fail enterprises that have been sucking public money for the last 20 years. A good example is Air Canada that gets bailed out one way or another every few years. Somebody has to pay to keep this inefficient company flying.

This is a very short summary of why we are still working 40 hours+ a week for just a little better standard of leaving than 40 years ago.

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#7
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Re: How Will Automation Affect Unemployment?

07/25/2010 12:00 PM

Agreed but for the standard of living - I would say it is much better than in 1970.

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#8
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Re: How Will Automation Affect Unemployment?

07/25/2010 1:56 PM

marcot - I can't agree with your statements: "I don't agree that the productivity gains have been kept by the employers, at least not most of it. The proof is that most companies are not doing better than in the 80's and many have closed."

The total value of the stock market in real dollars, not inflated dollars, has increased substantially in the last 30 years. This wealth is entirely in the hands of the "owners", a term I purposely used and is a bit different from your term "employers".

Retraining is not a panacea. Automation, like outsourcing, takes those manual labor jobs away. Retraining only works if jobs exist that people can be trained for. Students (workers laid off from employment consisting of manual labor) also must have scholastic apptitude to match the training and in many cases the physical, mental and emotional fitness to perform in the new occupation. If the unemployed cannot work then it is necessary for society to come up with ways that are morally and ehtically acceptable to keep those people from creating negative drag to the point of being disruptive and even destructive.

Perhaps in Canada your thesis fits. And it may well be a reasonable position taken toward a drift past center into socialism. Down here in the "States" wealth has piled up in the "ownership" class and there are plenty of highly credible economic studies that show that accumulation as well as the relatively unchanging middle class standards of living.

By the way, I think your government supports Air Canada for the same reason it employs or hires gardeners for tending the landscaping around government buildings. It's an aesthetic thing for the most part.

Back some 25 years ago when my work had me frequently visiting Winipeg I really looked forward to those most enjoyable flights on Air Canada.

Ed Weldon

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#9
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Re: How Will Automation Affect Unemployment?

07/25/2010 2:12 PM

How many 'dumb' jobs should be maintained to pacify the loser class?

The purpose of life is to do the best you can - not to be a 'good old boy' sitting at Billy Carter's service station pontificating about the state of the world.

I pointed out earlier that there will be jobs as ragpickers and sh*t shovelers which don't take any training. If someone chooses to not get an education and do the best possible today those will be in their future. The education may be as a skilled tradesman or as a research scientist but without it people should be prepared to live at a much lower standard.

The day is over that the unions can milk the automakers or steelmakers providing lucrative employment for what were in most cases nothing more than labor jobs.

Uncle Sam can't help.

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#10
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Re: How Will Automation Affect Unemployment?

07/25/2010 8:10 PM

Ed, you wrote " The total value of the stock market in real dollars, not inflated dollars, has increased substantially in the last 30 years. This wealth is entirely in the hands of the "owners", a term I purposely used and is a bit different from your term "employers"."

Is it really because the total amount of company worth has increased or a larger percentage of the companies went from private to public to soak up retirement funds money?

There was obviously a concentration of the wealth in the hands of fewer larger companies that became too big to fail.

Also, a company's worth used to be based on book value and some "good will". These days, the stock value is mostly "good will" that can be a multiple of the book value.

Finally, there are still a lot of jobs for untrained people. The problem is that most of them don't want to do them. It is more comfortable to stay on welfare.

E.G. We "import" field workers from Mexico every harvest seasons because the farmers don't find enough people locally do do the job. Should we stop that and force the farmers to pay more or close shop? They cannot compete with large farms in the south if they pay $20/hour. Should they automate harvesting to eliminate hand work?

Maybe, this year, some Americans / Canadians would work on the farms if the un-employment benefits / welfare were reduced. That is what happened before the WW11. You had to work to eat, even if the pay was bad and the job back breaking. But you kept most of the money you earned.

What is the best system? Should everybody have to work for a living or should we share the fruit of our work with others less fortunate or less motivated?

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#11
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Re: How Will Automation Affect Unemployment?

07/25/2010 10:06 PM

marcot -- I don't want to argue with your understanding of economics. We seem to be far apart in that respect.

I just want to comment on your last paragraph, which summarizes the essential question:

"What is the best system? Should everybody have to work for a living or should we share the fruit of our work with others less fortunate or less motivated?"

Please allow me to borrow your words here ..... Experienced earned, common sense taught, both rare essentials of life....... should guide you to the answer.

Ed Weldon

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Re: How Will Automation Affect Unemployment?

07/26/2010 1:23 AM

Quote: Should everybody have to work for a living or should we share the fruit of our work with others less fortunate or less motivated?

They should work - welfare is a serious obstacle toward the improvement of scoiety today. Too many bums are happy to stay there and sell/use drugs or other undesirable activity for pocket money.

No work - No pay

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#15
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Re: How Will Automation Affect Unemployment?

07/28/2010 7:10 PM

... and the "owners" or "employers" do what with that accumulated wealth?

(1) They bury it, hide it in their pillow cases; or

(2) they use it for snot rags - lots of snot, those capitalists...;

(3) they buy Air Canada or Delta or SAL tickets to ... wherever, and once in wherever, they then just bury it or snot in it; or

(4) they invest it in new ventures (nahhh, who'd do that? Why would ANYONE do that?); or they "let"

(5) government take it from them, leaving them a tidy sum still, no doubt, with which they loop to (1); or

(6) government "invests" it in new bureacracies to justify taking more from fewer to pay for those things governments pay for - inefficient transportation systems, new Post Offices, a lackluster Public Education system with fewer teachers and more administrators to bolster the bureacracy and clamor for "more" - sort of like (2) without the word "capitalist", or

(6) government "invests" it in new military technologies to better kill those with whom that government doesn't agree (when they run out of furriners, they'll come for me); or

(7 to ad nauseum)

If we're looking for a 21st century answer to a fairly-placed 21st century question, we'd better serve our grandchildren by not falling back on age-old "class" hatreds.

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#16
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Re: How Will Automation Affect Unemployment?

07/28/2010 10:32 PM

euhodos -- Your cynicism is showing here. About where the accumulated wealth goes? Largely into consumption especially if you include spending on ridiculously expensive education for their children. We're not talking the Buffets and the Gates here. Or even your run of the mill billionaire. The bulk of the wealth is going into the pockets of the more or less nameless single and 2 digit millionaire types.

I live in an area where tens of thousands of them live. Money seems to drip from the trees and is spent just as freely on high dollar lifestyles. A small proportion goes into new business development, but most is spent on shear luxuries. First spent it supports a few jobs, but beyond that it is largely sunk in the pit of luxury consumption. In any line of vehicles on the streets 7 out of 10 are in the 40K plus category. They spend $20K-$40K per kid per year to send them to private schools.

These are mostly people that couldn't manufacture a ham sandwich if their life depended on it. All they seem to be able to do is suck money and value out of others an consume it for themselves. Sorry if I show my contempt for that element of the human race.........

Go take a look at a Google earth image of the San Francisco Bay area. Try counting the number of yachts in the marinas. You won't be able to. Count how many homes there are on curving streets. Each one is worth over a million, some by a long reach. You'll have an even bigger problem counting them.

And they scream about high taxes even though the total tax rate in the USA is well below the 50th percentile of the 30 highest developed nations on Earth.

And government spending? Whenever some special interest sees an opportunity to buy political influence it does so usually with a 10:1 minimum ROI. (look at the teacher's unions and the investment banks) That's where your inefficiency comes from. Don't like the US Postal Service? Well guess what? They are driving UPS and FEDX crazy with better service at lower rates. They may not be able to keep that up with Congress threatening to keep them saddled with Saturday deliveries. Ebay's Paypal has finally crushed the money order cash cow and the internet has whacked the first class mail profits. But as an enterprise the USPS has been pretty creative and competitive and will continue to be if left alone by the Congress.

Off topic rant finished for now. Thanks all for your patience and even your rapid reflex to hit the delete button.

Ed Weldon

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#17
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Re: How Will Automation Affect Unemployment?

08/04/2010 11:20 AM

Easy fix: Legalize drugs! They will either be stupefied or overdosed

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#24
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Re: How Will Automation Affect Unemployment?

08/22/2010 12:22 PM

Ed Weldon,

You sound as if you are afraid of being slaughtered. Fear is a great motivator along with greed and lust. If you are moved by these as are the masses, you surrender what is great in man. Take a tour of some public housing projects and look at the conditions those kids are raised in and tell me welfare is a good system. I wouldn't wish it on anyone. Reproduction is never a right, it's a biological fact. Educated people, most generally, don't produce the number of off spring that the uneducated people do. Welfare and ignorance are worse than slavery. They produce filth, violence, misery in perpetuity and generate votes for liberal politicians. The greatest things I posess after my sons is my mind and character which drove me to move from the bottom to the upper half of the economic scale and produce 2 great human beings. I also have never claimed a deduction for donations, it was never my motivation. I am convinced that you are well meaning but walk all the places I have before you buy into the socialist agenda. LBJ expanded the welfare system and the vn war. He was not evil just not as smart as he thought. A great leader would provide motivation and oportunity. A real man sees adversity as another oportunity to prove he is worthy. Fear is never good for your soul or your character.

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#25
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Re: How Will Automation Affect Unemployment?

08/24/2010 3:00 AM

Conway – Your analysis of my written word is off the mark. I'm not afraid of anything I can understand. Knowledge, intellect and wisdom enable me to chart a course around the obstacles and threats I am not strong enough to overcome.

I admire your viewpoint on life. Easy when you have the aptitude and the right personal attributes. My viewpoint is more pragmatic. What people ideally should be and what they actually are differ greatly.

You can rail all you want about welfare; but it's a minor issue in our present economic situation. And it's a worn out recording I'm kind of tired hearing from my supposedly intelligent conservative friends. Unemployment payments are not welfare. It's insurance that has been paid for. There may be some practical limits to unemployment. I doubt whatever happens there will have a great effect on job creation.

National ignorance is a big problem. It's not restricted to welfare recipients and those in the lower economic tiers. I'd argue that the worst ignorance problems are among the affluent people who cannot see anything beyond their own selfish little "me first" world. Especially the ones who let some money grubbing TV talk show host or self serving union boss tell them how to vote.

Our education system stinks but for a minority of teachers that are truly dedicated to their work. The worst smell comes from some of our supposedly top universities who take your $200K in return for a branded ticket to a job and little more in the way of useful skills.

The only agenda I buy into is my own and that is based on what I think works.

And leadership in the office of the President? We've had it with every President. And starting with John Adams more than 50% of the people have rejected the President's leadership some to the point of totally despising him. Pick whomever in history that you think is the greatest leader of all and then consider the possibilities of that person being elected as President of the United States. So much for leadership.

About jobs and job killers. Here's a list:

Automation that works and eliminates actual jobs. (Sometimes by making the business more competitive or efficient it increases jobs.)

Automation that doesn't work and hurts the business

Offshoring of jobs

Defacto offshoring via loose immigration barriers.

Increasing inefficiency of practical vocational education including at college level.

Loosely managed financial system given to disastrous cycles not unlike history in the 1800's.

Quality of life issues like safety and environment

Labor laws that increase labor costs

Trade policy that favors imports over exports

Fiscal policy that leads to higher interest rates

Securities laws that produce emphasis on short term financial results discouraging long term employee development.

Labor laws that allow liberal "exempt" definition of individual contributors who can then be required to work overtime without pay.

Mass media scaring people with the idea of future economic collapse.

Wearing out of national physical infrastructure

Restrictive business and zoning laws in municipalities (NIMBYism)

Poor national energy policy.

Poor patent laws and especially Patent Office administration

Banks refusing operational loans to businesses

Tax laws that reduce business willingness to take risks and make investments

Product liability laws

Lack of tort reform.

High group health insurance costs due to lack of good reform.

And most of all….. A Congress full of people who represent their party rather than the people who elected them. A Congress that is the best that money can buy.

So which ones do you want to fix?

Ed Weldon

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#26
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Re: How Will Automation Affect Unemployment?

08/24/2010 4:23 PM

comprehensive and thoughtful Ed. ga.

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#3

Re: How Will Automation Affect Unemployment?

07/25/2010 2:06 AM

"How Will Automation Affect Unemployment?"

very badly.

when they first introduced computerization / workplace automation, it was with the carrots of "time-savings, efficiency, skills improvement, job upgrading, promotions, etc."

corporations worldwide rode the ITC bandwagon (except for Japan and I'm happy for them), displaced manual workers rendered redundant were "retooled" and given new positions. but all of these carrots are myopic at best. if one were to extend his view of how a falling domino affects of the others, it is a given conclusion that all dominoes would end up lying down. simply speaking, there has got to be an end of the displacement, and somewhere, somehow, there will be redundancies that can no longer be accommodated by the organization. the answer? optional retirement.

but it doesn't end there! technology is a beast that devours itself. soon, fewer and fewer people will be required to run not just the manufacturing but the management processes as well. displacement after displacement will take place, until the ultimate business scenario is achieved - manless manufacturing and management. the workers? hobos, beggars, drug-numbed, brain-washed, waiting for the next government dole-out to survive. *that* is the ultimate control of humanity.

then, unemployment will cease to be a term, simply because it does not mean anything anymore.

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#5

Re: How Will Automation Affect Unemployment?

07/25/2010 3:40 AM

Automation makes people go for the professions requiring knowledge and training. It removes the dumb jobs that are simply manual labor.

If a person wants to work in the future and wishes to have a decent paying job, they have to prepare for it.

There will always be room for rag pickers and shi* shovelers though. In the US, Europe and a few other countries the common laborer has had good fortune up to now. Today they are being forced to join the world labor pool with all the benefits - not much.

To whine and cry about it won't do any good. Forget the revolution garbage as there would be no benefit in the end for the participants. That only works when religion is involved.

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#18
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Re: How Will Automation Affect Unemployment?

08/04/2010 11:30 AM

Maybe we "Americans" should just ship our employees overseas like their jobs.

Let us face it, the next step from an industrialized nation need be an intellectual based economy.

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Re: How Will Automation Affect Unemployment?

07/26/2010 11:33 AM

As Arthur Clarke predicted in his "Profiles of the Future" automation will render a couple of mankind's inventions obsolete. Namely labour and money. How far away are we from doing every necessary job by unsupervised machines? Its actually pretty hard to come up with a job that cannot be done better by a machine today. Oddly enough the most "automated" industry today as compared with a century ago is farming. A couple more steps and the whole food production system could be human-free. Now we need an automated delivery system to get the free food to the people.

Getting from here to tomorrow is going to be a problem I fear. Those with the money right now tend to like to hang on to their advantage, and social upheavel is rarely peacful or bloodless.

Will the history books that record the 21st century describe it as the REAL industrial revolution?

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#14

Re: How Will Automation Affect Unemployment?

07/28/2010 10:42 AM

As an engineer working in the factory automation industry I believe that we are a long ways away from the kind of automation capability (at reasonable cost) needed to have the effects being discussed. There are very few products made in what we used to call "lights out manufacturing" facilities. We can't replace the human hand-eye-brain coordination at costs anyone considers affordable or justifiable. In some cases I have worked on we are bringing human labor back because of the inherent flexibility.

Automation is just a tool. You need a person to wield it.

I would like to read the book though.

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#19

Re: How Will Automation Affect Unemployment?

08/04/2010 11:55 AM

I am a mechanic, college educated, Automated Manufacturing Technologies my field of study.

Please allow for a lowly maintenance man to enlighten those of you who do not "work on the floor". No matter how advanced Automation will come, there are limiting factors not being taken into account, fiber-optic robotic technologies will never advance to the point of not using in some step or factor "dirtied" by man. Programmable Logic Controllers, to date and long into the future require human input. Machining is the largest limiting factor, from materials to delivery it is fraught with human variables that automation can not economically address.

From a rational standpoint, while a man is imagining, creating, implementing, working out glitches, repairing, upgrading Automation men/women will always be needed to do the work.

If we are lucky enough Automation will make ignorance obsolete. An intellectual/technological based society is the only reasonable step from an industrialized society. Imagine all the discussions going on by individuals when the cotton gin went into operation.

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#20
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Re: How Will Automation Affect Unemployment?

08/04/2010 12:13 PM

Greater minds than mine have said that when discussing the future be very very careful about using such words as "never", "always" and the like.

Just pick up any copy of Scientific American and read the section where they reprint articles from 50 or 100 years ago. Or recall such declarations as "man will never fly", "Man will never walk on the moon", or "640k ought to be enough for anybody".

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#21
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Re: How Will Automation Affect Unemployment?

08/04/2010 12:38 PM

Welcome to CR4! you will be a valuable addition.

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#22
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Re: How Will Automation Affect Unemployment?

08/05/2010 4:28 AM

Oh, there's plenty of oil an water to fight over so as many have now of what you may call the "loosers" will join the military because they simply have no other options. Then at least some of you "winners" will shake the hands and slap the backs of those loosers.

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#23
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Re: How Will Automation Affect Unemployment?

08/05/2010 12:10 PM

huh?

what is the subject again?

at any rate.. your point is considered true in this household... that is a phenomenon that started with Hitler's brown shirts in the thirties... and I think that most sane people are against it. Better to spend the money building roads and investing in new business ventures.

I am one man you will not have to fight, brother. I will not take up arm against you, regardless of the odds I face.

chris

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