future of work

Robot Tax (No), Sovereign Wealth Fund (Yes)

 

Let’s talk for a minute about Robot Tax. Recently, it’s been a quick fix concept, espoused by Bill Gates and others. In San Francisco and South Korea, there is already talk of implementation. It’s the wrong idea, unless The United States truly wants to hinder robot implementation, in which case let’s hope the rest of the world agrees at the exact same moment to the exact same policy.

The idea of a “robot tax” comes from the fear of Technological Unemployment. Machines replacing human workers at many jobs, without an offsetting number of replacement jobs. I find this fear to be very reasonable as I have argued here: https://medium.com/@ForHumanity_Org/future-of-work-why-are-we-struggling-to-understand-the-disruption-e7661a2a0a81.

I also recognize that not everyone thinks that Technological Unemployment is a problem. However, there is one thing I do know. If Tech Uneployment is not a problem, then we will end up in a good place with minimal risk and an economy that has grown more efficient, creating many high paying jobs. If however, Tech Unemployment does come to pass, then we will be faced with some major societal challenges. Upside gain = POSITIVE, down side risk = VERY NEGATIVE. So with my risk management hat on, this blog post attempts to deal with the downside risk of Technological Unemployment, by tackling the issue of “robot tax” and introducing an alternative solution - a United States Sovereign Wealth Fund (USSWF).

To begin, let’s examine some key assumptions for how Technological Unemployment may occur, recognizing that this is not a certain outcome. There are those who even argument that it won’t happen at all.

  1. Technological unemployment will be a process that takes years if not decades.
  2. We don’t know how and when people will become displaced. This is true at a company level, a sector level and across the economy as a whole, which I discussed here https://medium.com/@ForHumanity_Org/the-process-of-technological-unemployment-how-will-it-happen-489e2f8b037c
  3. We don’t know what new jobs will be created
  4. There is an implicit concern about rising income inequality as the owners of capital reap the rewards of automation, while labor receives a decreasing share — approaching zero
  5. There is a belief that technological unemployment will be a byproduct of significant growth in economic production and subsequent wealth attributable to the implementation of AI and Automation.

Technological Unemployment, as discussed in detail by Oxford (2013), PwC (2016), Mckinsey (2017) and referenced directly by the White House report on AI and Automation (October 2016) is estimated to result in as much as 30–40% unemployment. Many people believe that this possibility is real and as a result they are concerned about supporting the unemployed. This is the genesis of the “robot tax” concept. Here are some concerns about the idea:

  1. It picks winners and losers based on how easily things are automated
  2. It creates a huge competitive advantage for countries/jurisdictions that do not tax robots. Most companies competing in AI and Automation are global in nature. Machine implementation will simply be shifted to other jurisdictions where the tax impact is minimized, so will the wealth creation associated with that machine implementation. Apple is a perfect example with nearly $250 billion dollars in cash overseas. Nearly all of that offshore cash is a function of tax issues. This point is not debatable, it is a corporate responsibility to minimize taxes legally, just as Apple has done. There is significant tangible history of corporations shifting production to jurisdictions where the tax is favorable. A robot tax punishes companies for innovating and will drive wealth creation out of the United States.
  3. Bureaucracy, companies rarely “flip the switch to automation” on a Friday and asks a set of employees to stop coming in on Monday. Therefore, identifying human replacement by machines will be difficult and policing a “robot tax” implementation would require significant manpower. If you are like me, when you see something is difficult to police, you probably also imagine a large bureaucracy trying to police it. Therefore, imagine the IRS, do we really need an IRTS (Internal Robot Tax Service) too? I suspect that is something most people would like to avoid. Taxes are difficult to implement on all companies public and private.
  4. Timing and measurement mismatch — Another problem with the “robot tax” concept is timing. For example, Company A automates Person A out of a job and therefore is subject to a tax. So Company A has its profit and capital reduced to pay the tax, but if this happens tomorrow, it is reasonably likely that Person A finds another job. Now the tax has reduced the capital allocation capability of the growing company and wasn’t put to good use supporting Person A who didn’t require the funds. Instead, it sits with the government, which is surely an inefficeint allocation of capital.

On top of all of this, no one has layed out the entire structure of a “robot tax”. Some have suggested banning the replacement of jobs by machines. Others have suggested a tax without much detail. In South Korea, where reports came out that they had enacted the first “robot tax”, it turned out to be all hype. The actual implementation was the decrease of tax INCENTIVES for the makers of automation.

In the end I suspect a Robot Tax is simply a reflexive action being suggested by people who are rightfully concerned but have no other alternatives to address their concern. Ideally this paper and the USSWF addresses those issues and proves to be a better tool to tackle the challenges.

Look I get the theory, if you want to grow your company and make more profits for yourself by automating, let’s tax those profits because you are removing jobs from the workforce. However a tax is punitive and redistributional. Why not participate with the company in their wealth creation, on behalf of that displaced worker. Practically speaking, if a worker were to be laid off by Google, Amazon or Apple, but compensated in stock for their termination. There is a decent chance that the capital gains of the stock may offset the lost wages.

If you believe the concerns about Technological Unemployment and that a significant amount of work will be replaced by automation, we do need to prepare for higher, permanent unemployment. So what should be done. The answer, from my perspective, is a series of solutions listed below (of course, this is no small challenge and requires many policies to try to mitigate the risks). This list amounts to a comprehensive AI, Automation and Tech policy for the United States (where I have covered them previously, I will show the links), but for the rest of the piece, we will concentrate on point #5:

  1. Lifetime learning to ensure we have the most nimble and current workforce available https://medium.com/@ForHumanity_Org/lifetime-learning-a-necessity-already-2e96807251db
  2. A laissez-faire, regulatory environment (as discussed by Andrea O’Sullivan and others) that encourages leadership in the area of AI and Automation, (one could argue, this exists today, but is unlikely to remain so lenient, which may eventually hinder the expansion) https://www.technologyreview.com/s/609132/dont-let-regulators-ruin-ai/
  3. Independent, market-driven audit oversight on key inputs to AI and Automation, such as ethics, standards, safety, security, bias and privacy. A model, not dissimlar to credit ratings https://medium.com/all-technology-feeds/ai-safety-the-concept-of-independent-audit-370bb45c01d
  4. A plan for shifting current welfare and Social Security into a Universal Basic Income https://medium.com/@ForHumanity_Org/universal-basic-income-a-working-road-map-66d4ccd8a817, coupled with an increase in taxes on the wealthy to make the UBI funding budget neutral. In the future, NOT TODAY.
  5. Finally a Soverign Wealth fund for the United States (USSWF) designed to maximize the benefits of the growth and expansion on behalf of all US citizens equally.

Since this post is introducing the Sovereign Wealth Fund as a means towards maximizing the benefit of the comprensive Technology Policy listed above, we will remain focused on it and the other elements of the policy remain open for debate elsewhere.

Returning to the idea of Technological Unemployment, we can all agree it would be a process and would take some time to occur. During that process, there are few things that the United States should prefer to have happen. Here is a list of those positive outcomes:

  1. We want the United States to capture/create the maximum amount of the wealth creation from this process
  2. We want to be in a position to protect displaced workers immediately when they are no longer relevant to the workforce
  3. With regards to cutting edge skills, we want citizens of the United States to be in a position to posses the requisite skills for new age work.
  4. We want to begin to build a warchest of resources for the time when significant unemployment becomes more permanent (Sovereign Wealth Fund)
  5. As a country we want to be rewarded for create a favorable climate for automation and artificial intelligence

So with those goals in mind. We can examine how a sovereign wealth fund can help to achieve those goals and maximize benefits to all citizens from the expected increase in AI and automation.

To be clear, the funding for a US Soverign Wealth Fund (USSWF) is effectively a tax, so this is somewhat of a sematic argument, but the asset based funding and goal-orientation of the USSWF is what will differentiate it from the current discussions about a “robot tax”.

Sovereign Wealth Fund implementation, some of the highlights

  1. The USSWF immediately receives a 1% common stock issuance from every company in the S&P 500. Followed by a .25% increase each year for 16 years.
  2. Every new company admitted into the S&P 500 must immediately issue this 1% common stock into the fund and begin the annual contributions
  3. All shares included in the fund are standard voting shares with liquidity available from the traditional markets trading the underlying company common stock
  4. The USSWF is overseen by the US Congress
  5. The USSWF is controlled by a panel of 50 commissioners, one from each state, appointed by the governor of each state. The commissioner must be from a political party that the governor is NOT a member of. These are attempts to depoliticize the body and to identify citizens to serve the country.
  6. The USSWF exists for the benefit of all Americans equally, with a primary concentration of providing welfare/basic income support to US citizens
  7. The USSWF is a lock box and not part of the US Federal Govt budget. The US Federal Government may appeal to the USSWF for funding associated with the mission of the USSWF
  8. Simplicity — implementation is easy, automatic and systematic

Now, if this concept seems foreign to you, then you are clearly an American. Here are a list of the world’s largest Soverign Wealth Funds over $100 bil.

 

Notice that much of the oil rich world has already created a Sovereign Wealth Fund. Norway’s fund is the gold standard, providing a capital asset value of $192k per person. At 5% income stream, that is nearly a $10k payment per person with capital preservation. That payment can go a long way towards supporting a population. That is the concept we are trying to achieve with the USSWF, a bulwark against future challenges, such as technological unemployment. But instead of oil, or a single resource, the citizens of the US should benefit from the entirety of the economy. A genuine justification of our consumer-oriented mentality and laissez-faire regulatory environment.

As we try to capture the entirety of the US economy, we must find a liquid, tradeable proxy. I have suggested the S&P 500 as the right proxy for the US market. To avoid picking winners and losers directly. Automation and technological advances will happen in all industries and all markets. The best way to be comprehensive is to use a benchmark of the whole economy. The S&P 500 is widely regarded as the best proxy for the US large capitalization economy. Constituents of the S&P 500 are the most liquid stocks in the world and will result in the most minimal of impact from USSWF ownership. By having participation in all companies, the USSWF is in a position to reap the benefits of US economic growth, as represented by the stock market, on behalf of the citizens of the US.

There is also the opportunity to have the USSWF funded in additional ways, whether that be from oil royalties, carbon credits or other mutually beneficial societal resource dividend. These discussions are merited, but are beyond the scope of this paper today.

Some features and benefits of a USSWF:

  1. The intial funding is a tax on the wealthy (holders of stocks), which is consistent with a goal of redistribution and tempering the rising income inequality in the US. In some ways, it becomes a tax on foreign investors as well, which is an ancillary benefit.
  2. Keep capital in the hands of capital allocators and away from the government until needed
  3. It increases participation in the US economy as measured by the stock markets. All US citizens would have a share of the stock market up from the estimated 52% today.
  4. It creates a dynamic pool of assets which has an opportunity to track the expected wealth creation resulting from AI and Automation. Therefore the USSWF is well aligned with the goal of rewarding citizens for the possibility of having their jobs displaced
  5. A Sovereign Wealth Fund is far from new and has many precedents both foreign and domestic (public pension funds) upon which to build a robust program designed to maximize the benefit to US Citizens
  6. Alignment instead of antagonistic taxation. If the company wins, the country wins and even the displaced workers win.
  7. Compound return. Because the USSWF will not have a current cashflow demand, it will be allowed to grow for a pre-determined period, maybe 20 years. This will also maximize the benefits available to all current and future US Citizens

Some areas of concern (these points will be discussed further below):

  1. Dilution. This is immediate dilution on the value of existing shareholders and the equity markets are not likley to be happy about it.
  2. Commingling of corporate and government interests
  3. Reliance upon capitalism and equity market growth to fund future challenges. This is both a risk/reward area of concern and an idealogical area of concern for some.
  4. Bureacracy/control of the USSWF
  5. Increase in income inequality

Let’s tackle a few of these. Dilution, will be a concern and in a vacuum, one could expect the stock market to make a significant move backwards on this announcement. However, one could argue that the establishment of a long term, pro-automation policy and the avoidance of a “robot tax” might be equally as beneficial offsetting the expected dilution. Additionally, there is the benefit to the market as a whole from proactively addressing a pressing concern.

Commingling of government and corporate interests. These interests have been commingled since the formation of the country, however the US has had an active policy to not become shareholders of corporations and this would change (unlike most other countries). At the 5% max level, I don’t see government being excessively influential in a shareholders meeting. But it may be the implied result that is concerning. The implied result is that the government is now “pro-business” and thus must be anti-citizen or anti-worker. I recognize the concern, and this blends into point #3 Reliance upon Capitalism and equity markets. Unless we are prepared to change the nature of this country immediately, we are already firmly entrenched in capitalism. We ought to maximize its effect in this endeavor. Capitalism has an excellent track record of wealth creation, but sometimes at the expense of some who are left behind whether through income inequality or lax worker safeguards. In the case of the USSWF, at least the worker is better positioned to profit from capitalism than she would be otherwise. It is my belief that any other solution is too far afield from the current wishes of the population.

Finally, bureaucracy and control. The USSWF involves a good deal of assets and that means it is powerful. That will attract bureaucracy and politicians who will look to control the USSWF. A 50 person panel is more than sufficient expertise on hand to make quality, non-political decisions in the interest of the American people, especially if they are deemed fiduciaries by the legal definition. Any attempts to associate a large staff with the USSWF should be met with great skepticism as the mandate is the operation of an Index fund tied directly to the S&P 500. It is a pool of assets, designed to represent the US economy, not to create a target return. Any return associated with the assets is a function of economic growth or broad stock market appreciation only.

Increase in income inequality. As a result of trying to maximize the United States’ share of growth due to automation, much of those rewards will accrue to the wealthy. This is a result of the reliance on capitalism and maximum capital allocation efficiency at the corporate level. This of course benefits the USSWF, but it benefits the owners of capital more (95% versus 5%) in the short run. To mitigate this problem, a crucial piece of the Tech, AI and Automation policy is a significant increase in taxes on the wealthy. Universal Basic Income, which currently is the only means by which the massive amount of unemployed are able to survive, must be funded from somewhere. The USSWF would be in a position to provide a solid foundation for this payment, but it will be insufficient to meet the full demand. The owners of capital MUST recognize that their windfalls from reaping the benefits of a laissez-faire regulatory and tax regime will be called upon to benefit displaced workers.

No plan is perfect, but the USSWF is better than a “robot tax”, whatever that might turn out to be. The key to success with the USSWF or any other solution aimed at protecting US citizens from technological unemployment is to participate in the wealth creation. Other ideas along those lines would be welcome additions to the discussion. I hope that you will think deeply on these points, challenge the theories, make suggestions and further this debate.

Universal Basic Income Isn't Perfect - It's a Necessity Because of the Future of Work

The Roosevelt Institute recently did a study, which is being quoted everywhere, that claims that a $12,000 per annum Universal Basic Income (UBI) would increase the GDP by 12.56% above baseline over the course of 8 years. After which, the economy would return to baseline. Of course the part that no one mentions is that this transfer payment is DEBT-FINANCED by the US Government. Using the same model, when taxes were used to pay for the UBI there was no effect. So they adapted the model to account for distributional effects but they made no similar adjustment to the investment impact because the only impact they examined was marginal impact of consumption and not the impact on investment.

So let me get this straight, if the US Government borrows a ton of money and gives it to people to spend then the economy will be stimulated… I’m shocked! ANY program where the government borrows that much money will project to stimulate the economy. Whether it is a tax cut for the rich (because these days only about 49% of the population pays taxes… so by definition) or a huge infrastructure program or a huge energy program or a huge defense program. Money into the system creates GDP. One can debate its effectiveness, but I am not interested in that. The point here is that proponents of UBI need to stop citing this study. There is no way that a UBI program will be done in this country with debt financing… zero chance.

UBI will need to figure out how to represent itself. Here are some key questions for UBI, that if we can all embrace these suggested answers it will go a long way to keeping the story focused and making it palatable for people who oppose UBI.

  1. Is it inherently stimulative (no)?
  2. Is it redistrubution (yes)?
  3. Is it a possible answer for a world where the future or work is in doubt (yes)?
  4. Does it attempt to achieve some basic societal goals of food, clothing and shelter for all people (yes)?
  5. Is it possible that UBI has a negative impact on GDP (yes)?
  6. Does it matter if UBI may negatively impact the GDP if it achieves the societal goals and we have growth due to technology (no)?
  7. Should we consider UBI, like food stamps, which can only be used for the intended purposes? (no)
  8. Does UBI have knock on psychological positive effects (unknown)?

Let’s tackle a few of these points, starting with #1. In the Roosvelt institute study, the stimulative effect was due to the borrowing not the concept of UBI, so we should stop quoting GDP stimulus ASAP. Now, if UBI through redistrubtion is considered there are merits to both sides of the argument and I doubt that our models are sensitive enough to discern a positive or negative effect. First, if the wealthy are saving their money and NOT deploying it productively via their capital investments, then taking wealth from them in order to give it to the poor makes brilliant sense. The poor will use it to buy good which would increase GDP thru consumption. However the evidence here is probably the opposite. Which means that this capital has had a knock on effect of stimulating more GDP growth than the likely effect of purchases of food, clothing and shelter. On top of that, there is no certainty that money for the poor will always be used productively. We have an opoid problem, gambling and other non-productive uses of UBI that should be concerning. If a portion of the UBI floats into unproductive spending then GDP takes a second hit. One hit from the negative redistrubution of capital and a second from unproductive expenditures. All in, I think UBI would be fortunate io breakeven on GDP impact. Thus we should avoid suggesting it is stimulative since that likely only hurts credibility.

#2 Is it redistribution? Of course it is. UBI should embrace this concept, especially in light of the huge increases in income inequality around the globe.

 

This is a disgusting graph. The World should be ashamed to allow this to happen. But, but, but, we have three choices when it comes to redistrubtion. Don’t do it, do it partially or do it completely. There is an argument for don’t do it. It is as follows. The overall wealth of the world has increased dramatically and thus the percentage of people living in poverty has fallen dramatically. So there is a robust argument that we should continue to allow the capital to flow to the wealthy, allow them to grow global GDP and allow trickle down improvements to the poor. It has worked as you can see in the chart below showing the numer of people living in poverty (using a few different definitions of poverty).

 

But it has not worked fast enough for many, which is what humanitarians argue. They may be right, I can’t be certain. Which leads us to our second choice, partial redistribution. Allow capital to flow and the rich to get richer (because it creates growth that we ALL can participate in), but let’s take a portion, enough to buy the poor up to the poverty line for starters. Covering food, clothing and shelter. Essentially trying to have our cake and eating it too. Leave the majority of the capital where it has proven to be productive but earn the societal good of eradicating poverty. Sounds good, but not likely to be that simple. Taking a meaningful portion of capital from the wealthy allocators will have a leveraged downside effect to the economy. We simply cannot know how negative it will be. We have already discussed the challenge of maximizing the UBI towards 100% productive usage of food, clothing and shelter. Failure to achieve 100% productive UBI usage reducing the value to GDP commensurately. Our final choice is complete redistrubtion, which is both impractical and ineffective and not worth writing more than a sentence about. Humans crave power and will always try to achieve, thus we will have income inequality. The point of this entire discussion is that we need to try to find the optimal amount of redistrubtion.

#3 the reason that ForHumanity supports UBI is because we anticipate machines replacing most human input into work. In a world where the available jobs are substantially fewer than the number of people, we must create a society that supports all of its members with the basic necessities, otherwise anarchy and revolution become the only choice. As much as humans crave power, they crave survival more. They will do what it takes to survive, even if that includes setting aside civil society. Is UBI the only answer to a world with far fewer jobs than people? ForHumanity remains open to other suggestions.

#4 UBI can target transfer payments to individual to cover food, clothing and shelter. To be honest, that should be good enough. It is a wonderful goal for a society to insure that all citizens have the basic necessities of life. To eradicate hunger and to eradicate homelessness should be priorities which is hardly debatable. It only becomes a debate when two things happen. Government gets involved to “administer” the goal and when those with the wealth are taxed for it. One way to begin the discussion is with the latter. Silicon Valley billionaires can advocate for the power of UBI, but they ought to volunteer their own wealth to pay for it, in the same breath. Until they do, it will remain an elusive goal. With respect to government, it becomes a political tool. “How to implement”, “fund for administration”, “who gets what and where and when”. When you examine Social Security, it had a similar mission and altruistic goal and now it is a political nightmare. Attempting to pass the most logical of adjustments like, raising the qualification age (associated with the unanticipated rise in life expectancy), is impossible simply because politics get in the way. So to attempt to deal with the political ramifications, I tried to tackle some political reform as well, see the link.

Universal Basic Income — A Working Road Map
As I recently discussed, there are a number of challenges to making Universal Basic Income (UBI) a real solution…medium.com

I approached UBI as a transfer payment offered in exachange for a 5 year commitment to government services that would be required by all citizens between the age of 18 and 30. The brief version of the theory is that would “justify” the payment for life to the UBI detractors who worry that money for “free” is a bad idea for a variety of reasons. Second, this substantially helps to pay for UBI by lowering the cost of running the government on all levels. In the end, government is needed to administer the policy and politics will make it difficult to implement well.

#5 Could UBI have a negative impact on GDP? I believe that it would. Based on the reduction of poverty argument already presented. While I am certain that a large percentage of the UBI payment would be consumed specifically for food, clothing and shelter, those are all consumption items and provided a 1 for 1 impact on GDP. Whereas, capital, treated as investment capital can be leveraged into investments that result in the expasion of profit and wealth. I’ll give you an example. If I have $1000 and buy $1000 of food taken from a wealthy individual out of her $1000 of savings. I am fed and the food companies and grocery stores have an additional $1000. The wealthy individual has $1000 less of savings and therefore made $1000 less investment in something. Wealthy individual invests $1000 in a widget company, which pays an employee $800 and invests $200 in equipment to sell more goods and services, such that the company produces $2000 worth of product, then our investment has grown wealth, far more than our transfer payment is capable. This is the argument of capitalism and the numbers have borne out the argument.

#6 Does it matter if the economy is negatively impacted. Well that depends, has automation and AI increased GDP by more? How negative is the impact? Remember, we have earned a series of societal goods by implementing our UBI payment, especially if the future of work leaves us with many who require their UBI to survive. We also may create enough wealth to achieve our goals. This is more a question of timing than anything else. But a small hit to GDP is worth it for the good that UBI can do.

#7 — Should UBI be portioned out, similar to FoodStamps (SNAP) in order to prevent misuse. Covered in the article below, misues of Food Stamps has generally been considered a fallacy. The vast majority of the program works effectively (less than 2% fraud rate) and has been used for food. While it is not unreasonable to believe that misuse might increase when a UBI payment is larger, the concern may not be great enough to merit forced participation. This also helps to avoid a large bureaucracy designed to policy the implentation of the policy, which is probably more valuable.

The Very Short History of Food Stamp Fraud in America
The reform of the United States' approximately $1 trillion in welfare programs is a perpetual subject for lawmakers to…time.com

#8 Does UBI have knock on psychological positive economic effects? Here I think there is some possibility. There are many studies being done now, in microcosm to try to identify the effects. But I am afraid that the “in microcosm” and the non-permanent basis of all of these studies is highly distortive. Most of these people are working while receiving the payment. In essence, when UBI is the only choice, people will react very differently. When the future of work means limited job opportunities for people, reactions will be different. I suggest that we temper the “UBI makes everyone feel great” feedback. UBI is a necessity, for a future where work is scarce and people may struggle to meet the basic necessities of life.

UBI may be a great next step in our system of basic welfare. It may represent the best way for the wealthy to support the world around them and insure that the basic necessities of life are available to all. But I caution proponents of UBI to avoid over reaching with the “merits” of UBI, in the end, I think it damages the credibility of a potentially necessary program.

Replacing Your Doctors with AI and Automation

The field of medicine seems to be a touchy one for people with regards to the automation of how it is practiced. We struggle to get comfortable with the idea that machines could somehow replace the human doctors with whom we trust our lives and the lives of our children. It’s that fear that prevents us from taking the intellectual steps to realize that doctors, nurses and most medical services can and will be automated. If it helps, picture your favorite sci-fi movie where we all get dropped into a pod, which both analyzes and fixes us in a second. If that seems, nice and convenient and reliable — then you’ll be in a better place to realize that there are steps to get from here to there. In this blog post, I will aim to show you the cumulative steps that the medical industry is taking to automate. I suspect you’ll be amazed to see them put together, all in one place…

Let’s start with some amazing videos

 

Look at the amazing precision that robotic surgery is capable of. Now there is still a human involved in this particular operation, but the tasks of the movement can be mimicked in the same way that the the Moley kitchen mimcs the movements of a 5 star Chef. Code will be drafted to make the technique of each surgery precise and perfect. Humans will remain involved to “oversee” operations until the machine prove that they have the adaptive capability to react to unforeseen difficulties, but each time it happens, machine learning adds it to the repertoire.

Now we use doctors for a lot more than surgery. Diagnosis is a critical part of what a GP or specialist needs to provide their patient. Here are some examples of AI at work in diagnosis.

This Artificial Intelligence was 92% Accurate in Breast Cancer Detection Contest
In Brief Scientists trained an AI machine to detect breast cancer in images of lymph nodes. A group of researchers from…futurism.com

Patients' illnesses could soon be diagnosed by AI, NHS leaders say
Computers could start diagnosing patients' illnesses within the next few years as artificial intelligence increasingly…www.theguardian.com

Again, many of these tools are currently designed and marketed as assistants to doctors. Mostly because the providers of these products realize that patients aren’t ready to give themselves over completely to machines. But in reality, the practitioner is taking the diagnosis and telling you what it is. I’m certain we have a calming AI voice that can read out the results for you. A further argument companies make regarding these systems currently is that the doctor PLUS the AI is more reliable than either alone. A solution for that of course is two different AI processes, but again, is the patient ready to trust a machine-only process. Lastly, if you don’t believe that these diagnostic procedures will improve, then maybe you have been paying attention to ANY technological advancements.

How else do we interact with doctors. Regular checkups often include blood tests which of course are easily automated, simpler and more thorough.

A New Test Uses a Single Drop of Blood to Screen for 13 Types of Cancer
Cancer is often difficult to treat because it's not detected in time. That there are more than 100 types of cancer…futurism.com

Physical evaluation — your smartphone and personal health trackers can provide enormous amounts of data about our day-to-day health, sleeping, nutrition and physical activity.

 

23 and Me and other services allow you to examine your DNA. Combined with the technology of CRISPR and advances in gene therapy, we are already having discussions about treating disease before it manifests.

DNA Genetic Testing & Analysis - 23andMe
23andMe is the first and only genetic service available directly to you that includes reports that meet FDA standards.www.23andme.com

Maybe our doctors are just there to provide advice, because of course, they will know 100% of the latest technological advancements, newest drug treatments, how to avoid negative drug interactions, the latest physical therapy techniques, nutritional impacts and treatments and all the relevant info on you from your various specialists — oh wait… yeah that’s a machine, not a human.

It would seem we are left with the doctor-patient relationship. For many doctors, this is a genuine strength and in the future will become a key differentiation for them. But I have also heard of plenty of disappointed patients, who probably can’t wait to trade their doctor in for comprehensive machine interaction. In all of my work on job replacement by automation, I always leave room for the human element. There will be people who choose to acquire services from humans, because they are human (at least as long as we can know the difference). So certain doctors will find work because of “who they are and how they relate to others”, which of course is a great thing. However, most doctors will not survive automation. I personally expect to see a phase out beginning with the generation of our youth today, so roughly 20–30 years.

AI In Medicine: Rise Of The Machines
Could a robot do my job as a radiologist? If you asked me 10 years ago, I would have said, "No way!" But if you ask me…www.forbes.com

Lastly, there are cost and convenience factors. Machines work 24/7, doctors do not. Machines are capital investments, doctors have on-going salaries which rise nearly every year. In a world that is reaching crisis levels with health care costs, AI and Automation will continue to be solutions for rising costs and will likely force our acceptance of automated medicine much more quickly than anticipated. The replacement process will not be linear, nor will it happen all at once. Rather, you will see an increased use of technology around you during visits. Certain services and tests will be introduced as fully automated, but with doctors and practitioners nearby to supervise, until enough time goes by without problem that patients are comfortable. But eventually, machines will replace most of the functions of a doctor. If our doctors, the people we trust with our most valuable asset - our lives, can be replaced, then what won’t automation be able to replace.

AI and Automation - Replacing YOUR Job

Tonight I was with a collection of very smart people. All successful on Wall Street, all well into their careers. As the discussion turned to my work and looking at the future of Artificial Intelligence (AI)/ automation and its impact on our humanity, invariably, they are skeptical about machines replacing humans in the task of work. In fact, each one uses the same fall back argument, which seems to be the “go to” argument that people make when faced with the question of technological unemployment. “People have been afraid of job losses in the past and technology always creates new jobs”

And I understand that argument. I also support that argument, one need look no further than the job title of “Social Media coordinator” or “Web Development specialist” to realize that those jobs would not have even been considered in the mid 90’s. So let’s be clear, I promise that the advancement of technology will create new jobs for humans and I do not suggest that we should in any way limit the advancement of technology. Have I been clear? Does everyone understand that I know new jobs will be created and that I don’t want to hinder technology’s advancement.

Now, can we tackle the actual issue. AI and Robotics, unlike all technology before is replacement level stuff. More importantly, the goal of each AI/Automation advancement is looking directly at human behavior and trying to replicate it. The belief is simple. Machines make less errors than human beings do and Machines work 24/7 unlike human beings. Using that simple math (ceteris paribus), we should all agree that a machine that can complete the activity of the equivalent human is preferable. So here is the question I would like each of you to consider carefully and thoughtfully. What are the activities in your daily work which you believe a machine will NEVER be able to do?

Now before you answer, consider a few things. There are already machines creating art work, machines writing symphonies, machines flying airplanes and machines manufacturing microscopic mini machines. We have machines doing brain surgery, machines diagnosing tumors and machines predicting the weather. So as you analyze the tasks that you do and the skills that you exercise to accomplish those tasks, do you truly believe that a machine will not be able to do that task in the future?

You may genuinely believe that there is a portion of your job that the machine can’t do, but I guarantee there is a guy somewhere in Silicon Valley or in Tokyo, or in Shanghai or in Berlin, who looked at your task and is trying right now to develop a machine that can replicate that task. Can AI/Automation do every task as well as a human? Of course not, that is why we have machine learning, not machine learned… These systems are in their infancy and they are learning with exponential speed — speed which is unmatched in the human experience. When people hear me talk, sometimes they think I am anti-technology, when I am the exact opposite. I believe so much in humanity’s ability to advance technology, that I believe most tasks, will be replicated by machines and accomplished more efficiently and more cheaply than by humans. This isn’t necessarily what is best for humans, but those are unintended consequences and best left to a different blog post.

But let’s go back to you. Think about the tasks you do each day, what elements of your job cannot be replicated? Is there something special that is happening with your physical dexterity that a robot can’t match? Is there a specific set of thoughts or combination of thoughts, which a machine can’t mimic? The level of uniqueness that a person must feel to believe that the things that they do are not more than learned electrical impulses with 10–50 years of practice, would be truly special indeed.

Don’t get me wrong, humanity has many special qualities, but the things that make up work, rarely encompass those special qualities which I have listed a few of below:

  1. Hope
  2. Dreams
  3. Sympathy
  4. Peace
  5. Joy
  6. Contentment

I am sure there are a few others, like love, that people will offer up, but I would beg to differ on love and relationship-type differentiation. There are aspects of love, the things we do to demonstrate our love, which are highly replicable by machines. I am very comfortable with the idea that many people will not be able to experience love with or from a machine. But I hope that you would grant that there will be people who also believe they love a machine.

AI and Automation developers are already creating extremely life-like machines designed as companions for people who are ill, disabled or experience social disorders. The Sex industry advances the touch and feel of these machines. The medical industry advances cybernetics and materials to replace human tissue. When combined over the next decade with improvements neural nets, machine learning and quantum computing, we will find that machines will become reasonable proxies for humans. These machines will continue to improve their intellects and emotional capabilities as well. Over time they will earn trust and respect from people. Trust and respect are key elements in human relationships, which are either granted at the outset of a relationship or earned over time through positive, repetitive reinforcement. Learning thru repetition is a machine expertise. Finally, because of their input/output capabilities, these machines will be able to learn at an astounding rate compared to humans. So I ask you one final time to consider the tasks that you do in your job, which of those will a machine not be able to replace in the coming decade or two?

When you reach the conclusion which I have; that most “work” can be replaced by machines, now imagine that world. It’s different, it’s scary, it’s wonderful, it’s boring, it has freedom, it has slavery but most importantly it is VASTLY different from today’s world and it will change society completely. This is my concern. This is what I ask you to consider. I hope that you will join me in the preparation for the challenges to our society from AI and Automation.

The Process of Technological Unemployment - How Will it Happen?

There is a lot of question, concern and doubt surrounding the idea of technological unemployment. So much discussion that there is essentially a backlash of writing on how the issue is overhyped. The arguments are pretty standard, robots and AI aren’t THAT far along yet. Still plenty to do. And the most common, people have been afraid of technology before and it has always created new jobs and new work. People, like taxi drivers and truck drivers will simply have to get retrained. But the problem with the discussion is not that one side is wrong, rather it is that we are having two different conversations. The miscommunication lies in timeframe. All of the arguments for robs NOT disappearing are short run economic arguments. My argument is a Long Run argument. I have argued here:

#Future of Work — why are we struggling to understand the disruption?
I have this discussion with my good friends all the time now. I predict the destruction of most work and they think I’m…medium.com

The summary, is that in the Long Run, there are precious few skills that AI and Automation will not do better than a human. As a result, the only jobs for humans that will remain are those where the human controls the capital/labor decision or where the job values a human for their actual humanness. In that scenario, unemployment is well over 80% and society is dramatically changed. So, if you accept my long run argument, you would be right to wonder how we get from here to there. That is what this post is about. I believe that by highlighting this long run process, that it will help calm some short term fear and help people to better understand technological unemployment.

Summary points:

  1. Companies will put off hiring to absorb displaced workers due to automation
  2. We will NOT see significant layoffs related to Automation and this will be fuel of the technological unemployment nay-sayers, who inaccurately use ATMs as their argument for how technology creates jobs
  3. Job growth and hiring will continue to slow over the coming decade (decreased by more than 50%, while population growth has remained fairly steady)
  4. New graduates will continue to see a good job market as they are the most likely to have current skills
  5. 40 and 50-somethings will become the unemployed, as the technological skills pass them by
  6. 40 and 50 something will become the rise of the “part-time” worker, consultant, jack-of-all-trades and according to the BLS marginally attached U6 unemployed or completely unmeasured
  7. Economic shocks will result in higher levels of layoffs, similar to the 2009 Financial crisis and in contrast to the previous 40 years of market shocks.
  8. U6 (BLS — total unemployed and marginally attached workers) numbers become the key to understanding true unemployment. This number currently stands at 8.6% and hit a high of 17.1% during the 2008-09 financial crisis.

Let’s use Walmart as our example to understand a few of these points, ignoring the innovation that may occur in the near future, let’s start the clock with Walmart moving to autonomous truck drivers. here’s the likely process.

Step 1 — autonomous driving, but still with a driver. In a few test cases. This is standard practice for any company, especially when big changes are made. Small scale tests for a fixed period of time to determine scalability, feasability and roll out procedures. No one gets unemployed

Step 2 — Step 1 was a perfect success and the plan is to replace all truck drivers with full autonomous tractor trailers. More than 7,000 people out of work, right? No, you’d be wrong. Companies hate to fire people. It is bad press, it can damage their brand. It makes them look profit-centric, instead of customer oriented. So instead, Walmart will announce the move, with big publicity to highlight the savings and at the same time they will also announce that all 7000 employs will remain and be retrained.

How does this work? Essentially the company will go on a semi-hiring freeze. They are now overstaffed by 7k people. But a company like Walmart is turning over about 50k employees per year. So if they only hire 43k in a given year, that is something that people will hardly notice. In fact they can put out a press release highlighting that they hired 43k people in this particular year. The problem though, is that they hired 7k LESS than they would have or should have.

So that’s how it starts. Technological Unemployment begins with a reduction in hiring and we’ve been experiencing it for a decade already. When that happens at company after company, then hiring will stagnate first. However it will be difficult to see. New graduates will continue to be hired, especially if the education system is able to tailor its programs to match demands of a dynamic marketplace. The Bureau of Labor Statistics data backs this up.

The rate of job creation has slowed pretty dramatically. From 1970–2000, the US was creating about 2 mil jobs per year, consistently. Since 2000, that rate has fallen to less than 1 mil per year. While population growth has held steady at 2.55 mil per year. This is the hidden acceleration of automation. To grow profits and grow businesses, companies need less and less employees to be successful.

The unemployment rate for new college graduates. Even during the financial crisis of 2009, where we experienced peak near term unemployment, the unemployment rate for college graduates was never over 5%. As long as Universities continue to provide current, in-demand skills, graduates will find work. This also makes intuitive sense, because students, by their definition, have time to learn, whereas, under our current structure, education is not built into our day-to-day jobs. This makes workforce obsolescence a real issue. (See my blog post on Lifetime Learning)

Lifetime Learning — a Necessity Already
I started ForHumanity, partly as a response to thoughts I had about my children who are 8 and 6 today as I write this…medium.com

So that sets things up to become generational. It will be the 40-somethings and 50-somethings who will increasingly find it difficult to find new work as the technological skills may pass them by. More and more people in the middle of their careers will be forced into entrepreneurial endeavors and part-time work. Often, jobs won’t become eligible for unemployment benefits, like self-employment and many IRS 1099 filers. These people, unemployed or underemployed are not counted in any of the surveys, essentially they fall out of the work force. This number will increase over the coming years. I actually expect the Bureau of Labor Statistics to look to refine their labor participation measurement to try to capture these displaced workers.

This plays out in a different way. Over the past 40 years we have experienced market meltdowns and crises of various magnitudes. But the financial crisis in 2009 was probably the most poignant. The U6 participation rate jumped from 7.5% to 17.1% as the effects of the crisis enabled companies to actually eliminate people, the PR be-damned. That rise is unprecedented in the post-depression employment era. I believe that future crises will be used the same way as a significant form of layoffs and I expect this kind of jump in the U6 to be more of the norm than an outlier. It has taken the US economy nearly a decade of growth just to return to the mean U6 level of the previous 20 years. You can expect this U6 number to be extremely sensitive to market shocks and I’d expect a general upward trend in U6 over the coming 2 decades. This is where unemployment shows itself. I expect by the 2030’s, unless they change the calculation, U6 unemployment will be consistently around 20%

In the end, over the coming generation, there will be less job. Less full-time work and increasing replacement of human labor with automation, but it will be an insidious creep towards higher functional unemployment. Hopefully it will not be so subtle as to be neglected by the appropriate policy response or even misunderstood by technological unemployment nay-sayers.

Why Sales Jobs Will Be Automated Too...

When talking about Artificial Intelligence and Automation taking jobs from humans, most people think autonomous drive cars and trucks, maybe some cashiers and manufacturing line workers are at-risk. Asked to identify which jobs will survive, I hear people point to sales as a job that will survive machines. When I hear that I scratch my head and wonder if those theorists are familiar with a little company called Amazon. Sells a ton, doesn’t really have sales people. Now why is that? Why can their sales be automated and yours cannot? Here are are few reasons ALL sales can be automated:

  1. Many sales are recurring, but not resold
  2. Automated sales can be effected at all times of day, fitting better into a buyer’s schedule, automated sales work 24/7
  3. Increasingly buying will be automated and the machine doesn’t need to see the salesperson
  4. Automated sales can be demonstrate features and benefits perfectly with corporate-wide delivery and consistency
  5. Automated sales can be relentless, more than humans, they can be programmed to be as relentless as the company would like
  6. Automated sales don’t need commissions and incentive bonuses, it’s a one time capital charge
  7. No benefits
  8. No holidays
  9. No sick days
  10. No friendly discounts, cutting into the margins of management

Those are a few things that automated sales can accomplish. There is nothing “human” about the selling process, unless the buyer and the seller demonstrate an express interest in dealing in-person, which I grant, some people will continue to do, in the short run. But salespeople beware, it takes two to tango, so if your client gets automated or begins to prefer to transact in an automated fashion, then your job will not linger.

The point of this post is to highlight further that many of the collective tasks which combine up to create “a job” are easily done by machines. This is true in all jobs, from the most technical to the most compassionate. Each job may require vastly different skill sets and vastly different mixes of technical expertise versus emotional expertise, but in the end, they are still a sum of tasks. Machines are very, very good at tasks. They are getting better and acquiring more skills exponentially.

The Insurance industry has long been considered the domain of sales experts. It’s insurance after all, it’s not fun to sell, people aren’t excited to buy it, clearly it takes the tenacity and technical expertise of the salesperson to get those policies signed up, right? Technology is the number one capital investment of nearly every insurance company today. Why? The ACA has created numerous regulations and procedures, and companies require the ease and assistance of technology to manage the frequent enrollments, the government reporting, the processing of claims. Once you introduce some decent chat bots into the servicing equation, then only the strongest producers will survive. Producers and brokers on the margin, won’t demonstrate the valued-added to compete. Then watch the chatbots and electronic communication begin to take over the canvassing and the direct contact with prospects. This process is no different in other kinds of sales.

It is important for those in sales to realize early in their careers to see these changes occurring and to continue to identify where their humanity gains them value, makes them indispensable, but in an honest way. AI and automation will take every aspect of your job, your full list of tasks and each year they will shrink, so it is challenging to find where your humanity provides an edge. Each year, the technology will do more and more of the tasks that were included in your job description. Bosses notice when jobs become easier. Hiring decreases, you are expected to cover more accounts, because technology increases the amount of accounts you are able to cover. The company may not be firing people yet, but they are hiring a lot less sales people. Each year technology will making buying easier. Each year you will have more technological sales aids and tools including home office created features and benefits videos, chatbots for customer service, online ordering, electronic canvassing, automated emails, automated direct mailings. Remind me again what you did as the salesperson?

If this makes you uncomfortable as a salesperson, you aren’t alone. There has been a significant amount of research done identifying many at-risk jobs. Some analysis believes that as many as 40 -50% of all jobs will be eliminated over the next 10 to 20 years. Invariably, a few new jobs will be created, but not in the quantities required to offset the destruction of jobs. Unfortunately, as machines get smarter they are simply better than humans at more and more tasks. So the issue isn’t really your specific sales job, but rather what will we all do in order to cover food, clothing, shelter and to enjoy our lives? Unfortunately, that massive question will have to wait for another day and many other blogs, but if you can’t wait, I have written a number of pieces on Universal Basic Income, which may be one possible solution.

Emotional Intelligence Mirage? Jobs and our Humanity

Everywhere you look today, there are more articles about machines taking job and I am sure it is quite frightening. For your children it means a substantially different job market for certain, but also, the advance of technology likely means a vastly different society too. So in the context of educating our children, we are seeing many articles about “Emotional Intelligence”. Researchers are trying to figure out the skills and traits that will separate us from machines. They believe the key job skills in the future will be linked to emotion. Considering the skills that we ought to teach is a worthy endeavor as people will need guidance on how to best prepare their children for this future. However, I have my doubts about the inability of machines to replicate or approximate emotion. I think in the long run, in a time frame consistent with your children being in the work force, machines will achieve the following:

Emotional Intelligence machines achievements

  1. Approximate love
  2. Demonstrate tenderness
  3. React with empathy and compassion
  4. Operate as caretakers
  5. Be loved by some humans

I think machines will continue to struggle with these emotions or human traits below:

Emotional Intelligence machines shortcomings

  1. Faith
  2. Hope
  3. Dreams
  4. Sympathy
  5. Peace
  6. Joy
  7. Contentment

So what that means for your children and their education is very tricky. Unfortunately I do not have a lot of solutions, but I believe I am getting there through a process of elimination. For example, many of these articles talk about social work and care giving as jobs for the future. I reckon it is not that simple. Let’s try to break this down further.

A nurse in the long term care facility has a whole series of tasks.

— excerpt from http://everynurse.org/do-more-with-a-long-term-care-nursing-career/#whatdo

These types of nurses primarily focus on medical care for their patients. They may be responsible for monitoring and recording vital signs on a regular basis as well as administering medications. Long-term nurses will also perform other therapeutic and treatment procedures, such as massages and range of motion exercises.

Besides administering medical care, long-term care nurses may also be required to attend to some of the daily needs of their patients. This often involves assisting patients with tasks such as eating, bathing, using the toilet, and dressing.

In addition, long-term care nurses are frequently sources of support, guidance, and comfort for patients and their loved ones. They may offer advice on how to deal with a disability or simply provide a shoulder to lean on during particularly difficult times.

Let’s go in order. (task/current human or machine)

  1. Monitoring and recording — Machines exist today
  2. Administering medications — Machines exist today
  3. Massage — Machines exist today
  4. Range of Motion exercises — Machines exist today
  5. Assisted Eating, bathing, using the toilet and dressing — human
  6. sources of support, guidance and comfort for patients and loved ones — human
  7. Offering advice of deal with disabilities — human
  8. shoulder to cry on during difficult time — human

My problem is that I see scientists and researchers already developing technology for each of those items listed. For example, Soul Machines, a group out of New Zealand creates automated companions for people with disabilities. Designed to assist with #5, #6, #7, #8 as one example.

Kiwi startup Soul Machines reveals latest artificial intelligence creation, Rachel
Rachel can see, hear and respond to you - but she's a machine.www.newshub.co.nz

People will be skeptical about a machine’s ability to interact emotionally with people, I understand that. In fact some people will ALWAYS know they are dealing with a machine. They will have a “sense” about it even when machines replicate humans in touch, sight, sound and smell. Some people will ALWAYS prefer humans. That’s a good thing. But not everyone will prefer a human and this fact is already being proven out. Some patients will want their companion 24/7 which is impossible for a human. Others will prefer the dedicated 1-on-1 service offered less expensively by a machine. They will like that their machine has 100% of the most current “advice” to offer about their disability, which, of course, is impossible for human to have. Let’s review those “human” traits from everynurse.org again. This time I will tell you how a machine can do it better (from a certain point of view)

  1. Assisted Eating, bathing, using the toilet and dressing — By being available 24/7, by having human like dexterity and touch (which some machines already have). The machine will be stronger and the patient can rely upon that. Also, the machine is anonymous, so bathing might actually be preferred over a human
  2. sources of support, guidance and comfort for patients and loved ones — let’s talk about what makes up support, guidance and comfort. These are difficult to quantify feelings, but somethings that are done to elicit those feelings are quantifiable. Knowing the right thing to say. Just being there. Past Experience. Information about the situation from others. New developments. A hug. A gentle pat on the back. A kind word. You might not believe it and you may never accept it, but those are all things that a machine will be able to do in the next generation.
  3. Offering advice to deal with disabilities — This is experience and knowledge based, both traits that machines will quickly aspire to, catch up and surpass
  4. shoulder to cry on during difficult time —Not to make light, but machines can have a shoulder. The real issue is will we want to cry on it. Some will and some will not. Depends upon how life like the machine is, how comfortable the crier is with the machine, the shared experience of machine and man. It’s pretty rare that we cry on a stranger’s shoulder, so clearly the relationship is the key in this example.

One point of this exercise is to highlight that many of these “emotional” intelligence pieces to jobs are about two entities not one alone. So if a machine can build experience, reliability, consistency, knowledge and rapport with the human, then these once “human” skills can be transferred to machines. I know not all will accept this. Those who place a high value on pure “humanity” will provide some work for humans through their preferences. Those roles will exist, there will simply be less of them. When we reach that point, I will have a new question for you, will you always know that an entity is human? It is likely that there will come a time when you will NOT know. Then we have to question what it means to be human.

This line of reasoning may feel gloomy and it is meant to be. But not because I am down on humanity or the value of emotional intelligence, but rather because I want to make sure that there are no heads buried in the sand. “My job is safe, because I deal with people.” Much of the things that constitute work are tasks. Machines specialize in tasks.

This is a wake up call for people to evaluate the things that make us truly human. I’m talking about the things that when humans do them, it’s obviously special, like self-sacrifice. Think about this example. If a machine is programmed to protect you when you are in danger and it executes its job, that is expected. You’ll be thankful, but you are as likely to pat yourself on the back for a good investment.

Now imagine that same protection came from a human. It is unexpected, It is beautiful even. Not a single thought about investment money, just sheer gratitude. The machine, at least currently, gets no joy out of providing its service. But the one who sacrificed, receives joy and praise publicly. But inside,where it matters, there is deep soulful satisfaction of knowing that your life had a purpose even for those few minutes. If you’ve experienced it, you know what I am talking about. If you haven’t, try it. You will repeat it I promise.

So that is the emotional intelligence that is NOT a mirage. When humans live, for others, rather than for themselves, our humanity will thrive. There is so much good needed in the world and it takes a high emotional intelligence to deliver it. Instead, we live in a world that celebrates “self”. These are my rights, this is what I believe, here is what I have to say, look at my pretty pictures. Tech-enabled self-absorption. And why not? We believe we are 100% self-sufficient. What can’t we accomplish on our own, armed with the internet, machines that we can teach to think on our behalf and our smartphones. The real mirage is that self-sufficiency, we are so specialized in our lives, that if the highly-interconnected structure that is society today breaks down even a little, many people will be in for a rude awakening.

Maximizing your human life includes: love, sharing, self-sacrificing, comforting a loved one and sheer human-connectedness. The more of those traits you can bring to bear on your life and the lives of your children, the better off they will be in the coming AI & Automation dominated world.

The Amazon Impact on Retail Jobs - Defining Technological Unemployment

I’d like to try to help people understand the impact that technology has on a specific sector — retail. Amazon is clearly the dominate player in the space and has become a behemoth since 2007. But without carefully looking at retail employment numbers — we can be fooled. Many authors and researchers have made the mistake of not trying to dissect Amazon as a member of the space and as a result, they miss the picture. Often asserting things such as Tim O’Reilly asserts “What Amazon teaches us about AI and the “jobless future”.” People who think that Amazon is not directly tied to the destruction of jobs in the retail sector are fooling themselves. Yes, Amazon will hire more people, but more importantly, for every job they hire, they will likely destroy three or four at a minimum.

So I figured I’d try to put the math on what everyone feels. Amazon grows and adds jobs. But they destroy more jobs than they create because of their efficiency and profitability. THAT is the definition of Technological Unemployment.

Since 20007, using the Bureau of Labor Statistics (BLS) data

Amazon is classified as nonstore retailing (NAICS 454) and further classified as Electronic Shopping (NAICS 4541)

 

So since 2007, Amazon has added 324,000 jobs approximately and the sector they are in has only grown by 126,000. So Amazon may have destroyed 198,000 jobs just in the non-store sector.

Ok, that’s one take but, since that sector (non-store NAICS 454) includes things like door-to-door sales, which by anyone’s definition are arcane, let’s dive deeper into the whole retail sector and see if the argument holds.

The BLS estimates a 7% growth rate in employment in retail from 2014–2024 (7% is the growth in jobs SINCE the financial crisis). Now it may not be a fair assumption but let’s drag that back to 2007. If we do that, the entire retail sector should have grown by 1.1 million jobs since 2007. Now employment was reduced during the financial crisis, but it still has increased by 395k jobs since 2007 including the reductions during the crisis. Don’t forget about the the 324k jobs that Amazon added into that number. That means the retail sector added 71k over 10 years EX-Amazon, even the financial crisis can’t explain that. What does explain an 82% share of job creation in a sector is that Amazon is the most profitable, most efficient retailer on the planet and they are forcing the rest of the industry to adapt or die, and most are dying.

When we examine where that growth over 10 years came from on a subsector basis the story becomes even more clear. In our examination, we allow for some sectors to be directly influenced by Amazon and some to be completely untouched. For example, Amazon likely has influenced these subsectors of retail (all subsectors of retail are included below):

While not influencing these sectors at all:

While some of these might be debatable, I’ve tried to include as many sectors as possible to give Amazon a fair review.

Here are the results for sectors directly influenced -5 k (including the +324k at Amazon itself), said differently -329k jobs directly related to Amazon in sectors they have affected since 2007 (job gains or losses after each sector):

While not influencing these sectors at all which grew by +394k jobs:

And none of this analysis includes the gigantic amount of layoffs expected in 2017 in the retail sector. So to summarize, depending on the analysis you’d like to use, Amazon has destroyed 198k jobs in the non-store retail sector, hindered BLS expected job growth by as much as 1 million jobs or explicitly caused a loss of 329k jobs in competing sectors all since 2007.

Take that a step further, Jeff Bezos (now the richest man in the world) and Amazon shareholders have been greatly enriched over that time, while thousands upon thousands of retail sector employees have or will lose their jobs, creating serious income inequality as a result of technological unemployment. But income inequality is a story for another post.

Look, I’m a capitalist, I’m a fan of efficiency. I’m a fan of service and sometimes I’m a fan of Amazon itself. Amazon has changed the way we shop, no one in their right mind would deny that. But let’s not kid ourselves. It will come at the cost of thousands upon thousands of jobs. These job losses and store closures will have serious repercussions on their local communities, many of which will not benefit from Amazon’s job growth. There are meaningful consequences to the technological unemployment directly caused by Amazon, and our desire for Amazon’s service. Amazon is leader in AI and Automation in the retail space. Those efforts cost humans jobs and always will. AI and Automation combined are replacement level machines for human labor. Those companies that replace humans the fastest will reap the largest profits and be the most successful. They will continue to hire humans because they can expand their businesses. The humans that work at these companies will continue to become more and more efficient and profitable on a per head basis. However, it will result in net job losses for society. That is TECHNOLOGICAL UNEMPLOYMENT and it is coming to all industries, not just retail.

Universal Basic Income— A Working Road Map Part 2- Corporate Responsibility

Talk about partnering with companies to create a dedicated retraining program as part of the cost of replacement by machine. A commitment to communities and not just the bottom line (without breaking the profit motive). Job retraining/community commitment/then company based UBI and finally government based UBI. This theory is based upon today’s historically low unemployment rate. In other words, people in the work force are attached to companies NOW, let’s us that to minimize government involvement at the outset and maximize corporation’s responsibilities to this problem.

Look, I understand why everyone is turning to Universal Basic Income and Robot taxation. We look at a massive problem and throw our hands up and say “only the government can tackle this one”. I find the government isn’t very good at most things that it does and we seem to be getting worse and worse. Take Social Security, a solid concept, built in the 1930’s and legislators didn’t have the foresight to see rising average life spans. That’s a forgivable mistake. The unforgiveable mistake is the decades of time where this problem has been OBVIOUS and nothing is done about it because of politics (raise the age limit). So forgive me, if I may suggest some other avenues for us to turn and we leave government to the true backstop role that it ought to play.

So, in this blog post, let’s begin with the premise that government is available only as a last resort. The problem we are looking to address is that AI & Automation may eliminate between 40% and 80% of the jobs known today. So we have jobs today that we know will be replaced. For example, WalMart. WalMart employs approximately 6,000 truck drivers. Within 5 to 10 years those truck drivers will be replaced by autonomous drive vehicles. Now What?

Here’s what I propose, and ideally it is a model for all other companies that will likely choose to go down the path of automation (it will be more profitable). Now these things don’t happen overnight, so it won’t be a one and done kind of thing. I’d like to see Walmart choose or maybe be required by law to follow the following protocol:

  1. No layoffs from automation (that’s the equivalent of a robot tax btw). I am not suggesting that layoffs are illegal. Layoffs may be the only thing that keep an entire company from going bankrupt.
  2. Required internal retraining. The onus on the company, at their expense to make that employee useful to them
  3. Required external retraining. Here is our “robot tax”, but rather it is a layoff tax and is a one time charge, payable over 4 years. This 4 year payment could be funded through private insurance, federally mandated insurance or simply from profits. However the first two, if legislated and funded in advance are still forms of pre-Robot Tax.
  4. Federally supported retraining and Federal work fare
  5. Federal Universal Basic Income as a last resort

So let’s break these out. McDonald’s just announced 2500 automated kiosks replacing cashiers. They also announced those cashiers will become customer service reps and front of house staff. So this accomplishes number #1 , no layoffs. However there is a hidden consequence here and we will see it down the road. McDonald’s will hire LESS people over time. They will let attrition be their layoff mechanism. This is the hidden nature of technological unemployment.

McDonald's hits all-time high as Wall Street cheers replacement of cashiers with kiosks
McDonald's shares hit an all-time high on Tuesday as Wall Street expects sales to increase from new digital ordering…www.cnbc.com

This also highlights #2, McDonalds will have to retrain those cashiers to be customer service and front of house people. We can all recognize this isn’t the equivalent of a GED in terms of education, but they will certainly get new skills. For other companies, this can be the model, even if it requires more high end learning. I advise that companies begin to implement the Lifetime Learning model I wrote about here and they will be well on their way to creating the dynamic workforce that they want and need.

Lifetime Learning — a Necessity Already
I started ForHumanity, partly as a response to thoughts I had about my children who are 8 and 6 today as I write this…medium.com

I envision companies working closely with universities to incorporate cutting edge learning into the daily JOB of all employees. Technological improvement is happening so quickly, that unless you are constantly learning, you are falling behind.

Once we get to #3, we find a system that is fairly broken and ineffective. Which is why I’d prefer to have it handled at the corporate level. Micro level solutions always function better than large macro programs. At this level, we introduce our “layoff tax”, a one time charge to provide the employee with the funds he requires to retrain himself. We can call this money towards a new degree, or a 3 to 4 year severance package, but the result is that the employee knows they must find and learn a new skill to remain in the workforce.

#4 Often that employee won’t know where to turn for both education and new economy jobs. So now we begin the federal system of education guidance and work fare development. This is a dynamic effort from the government to meet directly with companies and continually identify the skills, education and jobs that are being filled by humans NOW. This marketplace of jobs and skill development will be applied directly to each individual worker once they enter the “work fare system”. The tax is no longer payable if the former employee becomes employed elsewhere.

#5 Finally, there simply aren’t enough jobs left. If you take the minimum numbers that many people are quoting we are talking about a 40% reduction in the jobs of today. If 10% of those are replaced by new HUMAN jobs, I’d be shocked. So minimum 30% net new unemployment. If you take my high end number the unemployment is 70%. In either case, here is where Federal Universal Basic Income (UBI) steps in.

Steps 4 and 5 can be iterative, as workers may choose to enter and exit the workforce, based on motivation and demand for their skills. Remember in my previous work, each individual has already earned their right to their UBI in the form of their dedicated government service.

Universal Basic Income — A Working Road Map
As I recently discussed, there are a number of challenges to making Universal Basic Income (UBI) a real solution…medium.com

I believe that this combination of changes (from UBI — a working roadmap Parts 1 & 2) is a reasonable way to step into our new world of technological unemployment and provide the support and back stop required to give everyone who wants to work the best opportunity to do so while ensuring that we are not leaving many unemployed and impoverished in a world of AI & automation.

LIFETIME LEARNING - A Necessity Already

I started ForHumanity, partly as a response to thoughts I had about my children who are 8 and 6 today as I write this. If you had asked me 18 months ago, “what skills should my children make sure that they have to be successful when they matriculate from University?”. I would have answered, quite assuredly, “They need to make sure they can code and program,”. Many of you probably still think this is important, but I’m here to tell you, those skills are already being replaced by machines. Machines are beginning to code and reprogram machines far more efficiently than we can. So what should I teach my children? That challenge is what started me down this path…

Data Science has become my poster child today for the challenge. Two years ago, Data Science was the hottest major at Stanford. Here’s a recent article from LinkedIn.

Data Science is dead.
Disclaimer: my opinions are my own - nobody and no organization is responsible for this post except me. Published on…www.linkedin.com

This article argues that data science is dead — ALREADY. You can picture the undergrad thinking, “Now let’s get this straight, I might have signed up for the most relevant, hottest degree at Stanford, dedicated two years of my life already to it and even before I graduate, my degree is useless?”

Now of course it isn’t that simple and Data Science degrees and knowledge will be highly valuable for years to come, but the point shouldn’t be lost. The degree and the subsequent job that might have been expected 4 years hence has already shifted. The knowledge required to be successful with that degree has already changed. Data Science degrees are the poster child for a symptom of this technology age. It is moving so quickly, that we have to change the way we approach learning to remain competitive with the machines. We need to shift to a model of LIFETIME LEARNING

Now the concept of lifetime learning isn’t exactly new. Some will argue that we are always learning and there is truth to that. Still others have pursued the constant student approach, racking up years of study for post graduate degrees and of course the PhD is effectively a mandate on lifetime study in your field. But I am talking about changing a basic paradigm that at least those in the West have followed. LEARN for a while then WORK for awhile and then RETIRE. I won’t tackle the RETIRE concept as that’s a big blog piece onto itself. But let’s focus on that first transition. LEARN then WORK.

Of course there is some learning that goes on at work. There are training programs, there are executive MBAs and occasionally a foresighted leadership team will ask their key staff or high fliers to get a little extra education to stimulate their culture or tackle an industry-wide challenge. But again, I want to approach this differently. It is time for work and learning to merge. For Work to recognize that they will have better employees if they are in a process of LIFETIME LEARNING.

For two decades, executive MBA’s have been this give and take between employee and company. The company values the employee and wants a smarter, more educated employee, but they also recognize that the employee will be more valuable to others with that degree. So deals are struck, you can get this MBA, but mostly on your own time (weekends and days off, mostly). The company will pay for it, but only if you remain with the company for a period of time afterwards. This is a deal done to retain the employee, not necessarily to advance the employee and their ability to function inside the company at their current job. The company had no say in the study. They couldn’t tailor the program to meet their needs as employers, as a function of their industry.

So here is what I suggest. Companies need to either develop an internal skill or engage an external service to create an ongoing learning process for all employees. Not just leadership, not just high fliers, but all employees. It is the only way to keep a company and it’s culture on the cutting edge of technology and all the change that is occurring. These changes effect each department differently. The type of knowledge that each group needs is different, so this isn’t a one size fits all approach. To be most effective, courses and knowledge may need to be tailored. Even the time and method of delivery needs to be tailored. Some course work lends itself to online study, other work is lab based, still other work might involve specific classroom time. The point is that the most effective programs will be those that are tailored to the current needs of the employees or the department. Here’s an example, for decades a lab had used trial and error to test the formulations for their new drugs under trials. This process is labor intensive. Recent developments have brought machine learning, artificial intelligence and automation to the process so that thousands and millions of tests can now be done in the time that it took to do hundreds and thousands previously. However, the output of this automation is statistical. The entire department needs to become more fluent in the language of statistics. Is statistics, the language of these scientist, No. Do they need a Masters in Stats, probably not. Do they need a couple of bachelors level course in stats to simply make their entire department cutting edge, YES. This example can be repeated over and over again, on a department by department basis to identify the latest skills/knowledge and challenges facing each group.

What I advocate is that companies change their culture further. Not only, to allow for constant education for the entire company, but also to build the learning into their current hourly commitments. Allow for an hour or two per week of study during job hours. Encourage it, rather than the world we currently live in where, everyone thinks they need to work 40–60 hrs per week just to survive their existing duties. I argue that your employees will be fresher, creative problem solvers who are working with increased efficiency under this climate. They will feel invested in, by their company and it will relieve some of the growing stress that employees feel about their job security to both machines and to younger generations with more current knowledge. But this sort of culture shift will increase the ability of your teams to collaborate as members will be more fluent in the new languages of technologies.

I believe this culture change, to a constant learning model, embraced by companies, individuals and society at-large will create a more dynamic workforce and will help to smooth the transition for employees and employers as technological unemployment increases its grasp on the future of work. Companies that don’t embrace a constant learning model will find sets of employees who are simply out-dated, and uncompetitive vis a vis machines. Those companies will also find themselves struggling to find good new employees versus their competitors who do embrace the constantly learning model. Finally, companies that fail to embrace this model will also find themselves lagging their competitors where it matters, on the bottom line.

Constant learn is a huge value proposition for both employer and employee and I hope that we can see smart companies move in this direction while intelligent, progressive universities move to meet this new and dynamic demand.