So there are obviously neo-Ludites that fear actions like this one by Google and Foxcon on the basis that it will lead to massive un-employment. Are they right this time around? I don't think so but I also am unsure how to quantify my belief. So I wanted to take a minute and run through some simple thought experiments. Feel free to point out any errors in math, I am notorious for allowing 2+2=5 type errors. Comments always welcome period.
First... start with a representational population of 100 people. It makes the math easier and the numbers a bit easier to comprehend. Currently the US distribution of labor is (Following from CIA fact book)
agriculture: 1.1% (agains for ease of discussion I will use 2% in most cases referring to this, which reflected ~1970 levels of agricultural effort in the economy)
industry: 19.2%
services: 79.7%
US population is ~316.5 million, labor pool is ~155 million or roughly 49% of the population is employed. Unemployment has been bouncing around 7% meaning 7% of the 155million viable labor pool candidates can't find work. 7% of 49 is ~3.5. So that gets us the following for our 100 person representational population.
100 people total
49 laborers
45.5 laborers employed
3.5 laborers looking for work.
The remaining 51 people are split between the young and the old. The young are presumably supported by the workers. The old are retired and provided for either by the fruits of their labor and or social programs again supported by the workers. Incidentally if you have ever wondered what the fuss about baby boomers retiring is all about, the crux of it is that the pool of folks on the old end of the spectrum is going to grow considerably. Since currently one of the primary means of retirement income is Social Security that means there will be a greater and greater percentage of the population out of the 'work force' relying on SS which increases the load on the remaining workers to keep things going.
Of the folks working
~1 works in agriculture to feed everyone
~9.5 work in industry making things (though the US is a net importer of manufactured goods I think). The remaining 38 or so, ~80%, of the work force are unemployed or work in a service industry.
In order to see the end game here I think you have to return to the Ludites and the world they lived in. Checking on the US history of agriculture you can see that as recently as 1870 agricultural work represented 60-70% of the US work force. Today it is under 2%. The labor force has made two major transitions in the US since then. It first migrated into industry, then with outsourcing technological innovations in manufacturing the US moved into a Service based economy. That 2% or less number is truly amazing. That is to say that only 2% of people in that 49 (that is less than 1) are needed to feed folks in my representational population based on current agricultural production methods. 150 years ago it would have taken up to 70 people doing backbreaking manual farm labor just to provide food for 100. That is a massive improvement. Looking further you may also realize that means in 1870 you had 70 people out of 100 employed in agriculture which represented a higher percentage of the population involved in a basic subsistence activity than is engaged in the entire economy of today (49 out of 100 in my example based on current US statistics).
So let us continue on down the rabbit hole. Lets say the industry jobs reached the same level of automation as agriculture and you went from 9.5% to 2%. And in the service industry you went from ~80% to 2%. That is to say where before you needed 49 people in a population of 100 to do all the work needed, you now only need around 3. Leaving 97 people not needing to do anything if all we want to do is maintain our current level of existence. Lets put that in context so that perhaps the light at the end of the tunnel starts to shine through here.... Go back to 1870 where 70 of 100 were engaged in agriculture and apply this logic. You are saying that when you are done 1 out of 70 is working in agriculture and the rest are doing nothing. Same amount of food is available just a WHOLE lot LESS work (by people) is needed. That is what happened from 1870 - 1970. But surprisingly enough you don't see 69 out of 100 folks sitting around doing nothing because they are not working on a farm.
This leads to a couple of questions regarding our current situation. 1, is it possible to reach a similar level of efficiency with manufacturing and service industries as we have reached with agriculture? 2, if it is possible, is there something to take the place of these two primary employment areas? I would add a third. Does something need to take the place of manufacturing and service industries? The need for a replacement in my mind is completely determined by whether or not we have reached the pinnacle of 'civilization'. If we have then we don't need to keep having everyone slave away if only a small fraction need to do so in order to maintain our 'pinnacle' state. If we haven't, then in 100 years or less there could be folks looking back on this time the same way we look back on the 1870s. And probably wonder why folks were scared of embracing such obvious improvements :-).
So let us back out to that full 100 people representational population again. And lets move everything to whole numbers. Without a change to employment expectations lets employ this theoretical improvement via automation technologies in both industry and services. This is the absolute worst case scenario because that basically inverts the employed vs. unemployed because there is no change in employment expectation (IE between 18 and 65 you are part of the labor pool and expected to be gainfully employed).
That makes it:
51 are either to young or two old to be considered as part of the labor pool
46 are gainfully employed
3 are looking for work
changes to:
51 - young and old
3 - gainfully employed (~2% of 49 in all 3 areas)
47 - are looking for work
In terms of our current system of economy that translates into a much higher unemployment rate than seen in the worst hit areas during the great depression (33%). This would effectively destroy the notion of capitalism as we currently understand it. Keep in mind that presently 10% unemployment is a bad situation in a modern economy. If you are not working in a capitalistic economy you have no way to exchange labor for capital. And when 43% of your population has no means of access to capital they cannot purchase goods. At that point the engine of capitalism grinds to a halt. Horrible right? But why? Basically because capital is no longer being distributed effectively through the population to drive supply and demand exchanges.
The interesting thing in this theory is that you do not have a drop in GDP. It is just being produced by far fewer people meaning we would be far more efficient in our efforts. In theory there is just as much money in the economy, all you have lost is the means of effectively distributing it across the entire population. If you solve the distribution issue you then have something very valuable. If you do not solve the distribution problem you have something very dangerous. In both cases it is the same issue you have to deal with. You now have massive amounts of free time in the able bodied population that needs to be directed somewhere. The old cliche 'idles hands are the devils workshop' has some bite. You have to solve the distribution issue otherwise that free time becomes destructive. The Ludites were a case in point of that particular issue. But if you do solve it then you are looking at a similar increase in the amount of time we have to dedicate to new activities as we did in moving from a subsistence agrarian based economy to an industrial/service economy. What exactly we could accomplish with that is a hell of a good question.
So solving distribution... that is tricky. For starters, in order to be most effective, people have to want to work. Currently that incentive is based in making money. Re-distributing the effort of 3% of the population to support the remaining 97% would require some currently unheard of levels of taxation. At least if the income evenly concentrated in the remaining workers. You see in order to maintain the quality of living the amount of distribution currently happen would have to remain largely the same. So effectively the remaining 3% of workers would be making effectively what they do now, and all the other money would be going to support the remaining population. Again that is at maintaining current quality of living levels.
The answer is actually something that isn't new. Slavery. Yes... Slavery. If you want to avoid the moralistic overload of that word you can use the more neutral "Free Labor" or perhaps more accurately "Extraordinarily cheap labor". Because you are talking about robotics instead of people either seems appropriate. So in this case, instead of moving the work to 3% with the assumed bump in pay, you are instead moving it to robotics and software. What does a robot or software need to survive? Once that is provided for the remaining result of robotic labor should be redistributed. The issue of separating the robotic creators from the labor results of their creation (to be held distinctly different from the profit from producing them in the first place) is a much easier task than the notion of taxing the working population at rates approaching 100%.
Now don't think I am going on about some insane level of technology like say the character Data, from 'Star Trek the Next Generation'. We are not talking about self aware machinery. Just a new generation of machinery. Lets say industrial jobs were all based on car making. So in our 100 person example 9.5... make that 10... out of the hundred are working in an auto plant making cars. We wave our magic technology wand and a new factory needing only 1 person to run it to be just as productive. Just more robust assembly line robotic technology needing less human oversight, fewer (perhaps no) tasks that still have to be done by hand. Some may think that impossible... while taking for granted the change in general involvement of the population in agriculture from going from 70:100 down to 1:100 from 1870 to 1970. Here we are 'just' talking about going from 10:100 to 1:100 for industry, and around 35:100 to 1:100 in service. Assuming the rate of change were identical (highly unlikely I understand) to agriculture these would represent 15 year and 50 year marks. IE in 15 years we would hit the manufacturing efficiency goal, and the service mark in 50.
Considering the rate of overall change in technology/society/economics from 1870 to 1970 looks more like an exponential growth curve I'd wager decent money we will hit those marks in considerably shorter times. Say 5-10 for the manufacturing goals. Less than 20 for the service overhaul. Mostly because the things that are hard to replace on the manufacturing side are in many ways more difficult technically than replacing say a 'waiter' at a restaurant. Solve the issues in manufacturing and it is simply a cost benefit equation governing how fast they take over service jobs. The X factor in my opinion is not the capability of the technology. The seeds of most of this are already starting to sprout. Its the transition issues. As these technologies mature (like the story this whole article started from) it will increase pressure on the work force to adapt. If the system cannot adapt to absorb the sudden movement of large percentages of its work force within its current methodologies, then you have the recipe needed for significant socioeconomic change. Translation in plain english: Enough people will be seriously pissed off and potentially dangerous that something has got to give. Worst case we would be looking at outright revolution and copious amounts of bloodshed on a scale not seen in the US since the civil war. Best case... probably still looking at the most significant changes to how the world works since the round of revolutions that occurred circa 1776.
So if all my rounding and prognosticating came to pass and Ludite nightmares became reality that would mean sometime around 2035 we could face the following situation
51:100 are retired or to young to work
3:100 are able to produce a GDP output equivalent to 2013s US economy (~49k per head)
46:100 are of sound body and mind and are doing ????? (PROBLEM)
The critical point won't be 2035, or whatever date it might actually be. It will be some tipping point leading up to that time between threatened established interests fighting for survival of the status quo vs. a change they cannot stop. The irony in my scenario is that those entrenched interests will collectively be causing the change as they continue to blindly chase the bottom dollar.
Anyway, in part 2 I plan to ramble through why I think this wouldn't be the end of the world. And take a stab at how I think we could make this transition to an as yet determined post today type system on the basis of robotic labor... or maybe that will be a part 3.
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