Automation, Part IV
By Louis Holder
This is the fourth of a seven-part series on changes to labor employment in the future, causes of this upheaval, and some possible measures to mitigate their disruptive effects.
Most of what is described in the foregoing is applicable to western developed countries but middle-income Countries such as Guyana are in the crosshairs. The difference is timing. Further, Guyana does not possess the skills-set to prolong the onset of these changes. The country has received some service outsourcing jobs but these are low-skill positions. It is therefore shared with the public to help focus attention on the decision-making needed to avert the imminent calamity. In past series, I described the nationalist fervour sweeping the western developed countries of America and Europe characterized by the emergence of Donald Trump and Brexit. The increase in income inequality is causing the stagnation workers are reacting to, and overpopulation leading to climate change will have future ramifications. Here we look at the next challenge, automation.
For some time now, businesses have been getting consumers to perform tasks that were once provided by their employees. So retail outlets now have self-checkout aisles. No need for cashiers. And this will worsen. Devices which scan the entire basket of goods are on the horizon. Your checkout experience in a retail store will comprise a basket scan, swipe of your credit/debit card and you’re on your way. No human intervention. The classic example is the disappearance of the full-service gas station in the US, where an attendant filled up one’s gas tank, replaced with the self-service pumps. Already the US Government has implemented some self-help measures at airports. Entering an airport no longer requires a visit to an Immigration Officer. You must first interact with a machine which takes your photo, compares it to that on your passport, generates a ticket and sends you along. Workers are fast becoming obsolete and redundant. A business consultant at Windstream has projected that within 20 years, 70% to 80% of all jobs that exist today will disappear just as the 170,000 jobs at Kodak did with the advent of the digital camera. Oxford University was more conservative predicting only 47% displacement in the US over the same timeframe. There will be new jobs created but not at the level of those lost.
By 2020, autonomous vehicles, computers on wheels, will be self-operating and quickly summoned by a click of an app on a smart phone. Since the purpose of vehicles is to provide transportation, there would be no need to own a car (my son, Sean, a car enthusiast, is not convinced and vouched to continue ownership). The entire automotive industry will be in turmoil as fewer vehicles are needed.
Except for Sean and a few of his mindset, your car will be at call at your fingertips and for a fraction of the cost to own it. And if cars can self-operate safely, who needs auto insurance. Packages will be delivered more expeditiously by drones removing the need for truck drivers. 3-D printing will eliminate the need to visit the retail store for most non-food items.
And, not only blue-collar jobs are at risk. IBM is developing software, Watson, which has already shown it is more intelligent than humans during a showdown on the TV show, Jeopardy. Watson will soon eliminate the need for lawyers and doctors, only specialists will
remain. At Miami airport, directions are given by a hologram which looks human at first glance. This is the future of job creation, or lack of, and no major country’s government is addressing solutions. Labour is becoming irrelevant because it’s overpriced in the western developed countries. A commodity is overpriced when it can readily be replaced by cheaper alternatives such as, in the case of labour, technology and/or outsourcing to lower-priced regions and countries.
American workers don’t add enough value to the commodity produced, or to their numbers (known as productivity), to justify the difference in their compensation. American workers in the manufacturing sector earn six times more than workers in Mexico, nine times more than China and a whopping 24 times more than Indian workers. As with all products that are overpriced, their demand declines until they become expendable. This is case with workers in the western developed countries. The market still remains the most efficient allocator of resources. Labour unions and politicians who feel they can continue to advance wages or make promises to do so without consequences are the source of the problem.
I was pulling for Bernie Sanders in the US Democratic Primary due to being a socialist at heart. And although I support many of his proposals, such as free tertiary education and health care, and the funding of elections, I strongly disagree with his proposal to raise the minimum wage as a measure to tackle income inequality.
This proposal will put more workers on the breadline as employers fast-track some of the technologies described above to replace them or shift their jobs overseas. Sanders and his kind are only hastening the advent of the storm. The American worker, sensing his lack of relevance in the emerging world order, is anxious and fearful.
Although the changes will start in those countries with the highest wage structures, it’s only a matter of time before it trickles down to countries like Guyana as producers adopt technologies to stay competitive.
In my next installment, I will start discussing possible solutions.
