Are you scared of Automation?


Automation saves human effort … it makes our lives better.

Yup – we all know that. The process is on for last 300 years.

Automation also leads to job loss.

Yeah … but new and more enriching job also gets created to compensate for the job loss.  That process is also on for last 300 years.

The big question is … is it going to be different this time? In past, automation would save human labor – physical labor and routine tasks. It relieved us of the drudgery. It allowed us to focus on things that we human do best, that is creative thinking and human interaction.

Now computer programs are increasingly becoming better at tasks which were at one time thought to be the exclusive purview of us human. The segment where us human have very competitive advantage over the computer programs is shrinking fast and at a scary rate.

Nah … still, the computer is no match for the human brain. Computers of today can probably simulate the brains of an ant. It has a long … long way to go before it can catch up with human brain.

If you look at specific tasks the computers can do … the list is amazing.

Gartner makes an interesting prediction – “By 2017, a significant disruptive digital business will be launched that was conceived by a computer algorithm.”

OK … OK … granted that computers are getting better at doing what we humans do but throughout history of industrialization we have seen that when one type of job disappears through automation … different and more rewarding jobs gets created. So, why should we worry?

Though the jury is still out, the available evidence suggest that the net job loss due to automation is real. Here are 3 articles which outlines the evidence [if you are interested in getting into the details of the evidence].

Hmmmm …. If continued net job loss is real then what happens to our society with so many people unemployed?

In my mind there is no doubt that out society must undergo a massive transition to adjust to the new reality. We have to challenge some of our beliefs that we assume today to be sacrosanct.

Here are four questions for you to think about in the context of large scale job loss due to automation.

  1. Can price always be determined by “demand and supply”? Automation can ensure that supply will always be exceed demand and marginal cost (incremental cost of producing one more item) is close to zero. In such a scenario, market dynamics becomes different.
  2. Can pursuit of continuous “productivity improvement” through automation remain a goal for ever? When you take this concept to its limit, all our basic needs could be fulfilled without human intervention, nobody needs to work! If people don’t need to work then how do they earn? Can they get what they need without actually earning any money?
  3. Is there a limit to “growth in demand”? We take it for granted that world economy will keep growing for ever. Growth can happen when every person consumes more and the number of consumers keep growing. There is a limit to both. It may take 50 to 100 years to reach that point we will ultimately get there. What happens then?
  4. Should “Return on Investment” guide all our investment decision? One of the fundamental principles of market economy is that the investment flows to area where there is maximum return. But what happens when supply exceeds demand and no prospect of growth. Then what would you invest on?

Will these happen tomorrow? May be not … but there is no doubt that we are moving in this direction.

These are fundamental economic principles and if they become invalid then we are talking about a big fundamental change.

I just hope that this change happens gradually … smoothly … peacefully … 

 

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