Yes, folks, it’s official: The future—the quite near future—will have less and less use for human workers. Software or gadgets will do the tasks that millions of people now do for modest middle-class salaries. The software and gadgets’ creators will get tremendously rich without employing many people. WhatsApp, whose entire payroll headcount seems barely to have made it into two digits, sold for $19 billion.
It’s all happening very fast. The field of Artificial Intelligence was dominated for decades by Moravec’s Paradox: Tasks that are very difficult for human beings, such as playing grandmaster-level chess, are fairly easy to get computers to do, while tasks any two-year-old can accomplish, such as distinguishing between a cat and a dog, are ferociously difficult to computerize.
That’s beginning to look quaint.If he's right, what does it all mean? For starters, it means that low interest rates are here indefinitely - according to Larry Summers - because there aren't any capital intensive investment opportunities left and so the supply of capital is already exceeding demand. Great if you're a borrower, not so good for savers.
But that's just the macro-economic picture. What about the micro-economic one: specifically, what jobs are at risk from the demise of Moravec's Paradox? Carl Benedikt Frey and Michael A. Osborne have worked out the vulnerability of 702 different occupations to automation and therefore to imminent mass redundancy for current practitioners. Ranking them from the least likely to be automated at number 1 (recreational therapists, in case you were wondering) to the most likely to be automated at number 702 (telemarketers, so you know). Luckily for economists, they are reckoned by the authors to be the 282nd least vulnerable occupation to computerisation, with a probability of just 0.43 (out of 1). On the other hand, market researchers rank nearly half way down the list at 337, with a probability of computerisation score of 0.61. Not great.
So a glut of capital meets a glut of labour together with a glut of really cheap, increasingly smarter computing power. That's a lot of glut. One picture of the future that might emerge is highlighted in Sarah Kessler's essay Pixel and Dimed. She tried living in the so-called gig economy now being created by the likes of TaskRabbit and Amazon Mechanical Turk. Basically you get paid to be a 'micro-entrepreneur', i.e.: a piece rate worker. It's a pretty depressing scenario, and she was very glad to get back to her job as a journalist. Though she better watch out for the rise of the robot reporters.
Where might it end? Martin Hutchinson thinks we might end up back in the era of Downton Abbey. Sounds terrible until you realise that not only was there less income inequality back in the 1920s, but so also productivity and real interest rates were higher.
Mind you, waiters rank 592nd in the list, with a probability of computerisation equal to 0.94. Perhaps Mr Carson will have to re-brand himself a recreational therapist?
Still, we can always hope that our politicians and policymakers - in Dublin, Brussels and Frankfurt - will come up with a solution. Though as Francis Bacon once observed:
Hope is a good breakfast, but it is a bad supper.