The Software Apocalypse

It’s not robots who are taking away white collar jobs, it’s software. Smart software.

Many educated people are skeptical about robots taking their jobs, after all, robots have been around for quite a while and most of us still have our jobs. Three things make it different this time, one is Moore’s Law which has made computers more powerful than ever. While Moore’s Law may be dying, it’s last and second last breathes will shake the world. Second, is that machines are taking on cognitive capabilities. Third, is that information technology now runs every part of the economy. When farm hands lost their jobs because of tractors, they went elsewhere to look for work, but now that information technology is everywhere, nearly every kind of job is susceptible to automation. There’s nowhere to go.

When we think of robots taking away jobs, we think of auto workers, or hamburger flippers. But many of today’s jobs are being taken over by automated smart software, and unlike robots, you can’t see automated software.

Machine intelligence is now becoming more of a utility like electricity, it’s everywhere, and it will absolutely be disruptive. Many skeptics (political economists) say that new jobs will come along like they have in the past, which is true, but there won’t be as many of them. This is because even the new jobs of the future will also be highly automated. As you can see from the chart below, Google now makes way more money than GM did in its heyday, with only 5% of the workers. More profit, less workers. This is what motivates corporations. And corporations rule the world, not democracies.


Skeptics will also point out that 100 years ago many of today’s jobs didn’t even exist. While true, what they don’t tell you is that 90% of today’s jobs already existed 100 years ago, and that only 10% of today’s jobs are new.  Automation will disrupt that 90% of historical jobs. So while new jobs will appear, they will also be automated, and unable to absorb the unemployed. But it gets worse. Political economists will talk a good game about Uber-like jobs, which only represent like 1% of employment. They’ll say Uber allows you freedom to take care of your family, like as if you could afford a family. Task Rabbit small jobs are like being only able to rent a hotel room for 15 minutes, when what you really need is a full night’s sleep. I can barely do the house chores, let alone run around doing Task Rabbit chores for someone else. Task Rabbit: “Hey, I’ll pay 10 bucks if you come take out my trash.” Great for the kids, bad for adults.


Productivity and pay rose lock-step until the mid 70s because machines were essentially tools that made workers more valuable, but now that machines are smarter, they are no longer just tools, they are becoming actual workers, and making human workers less valuable. This decoupling of wages and productivity has political economists pissing their pants at night because they understand and know what this means.


Automation is causing the economy to be less effective at creating jobs. The following chart shows job creation growth in percentage terms compared to the previous decade.


After we sent our manufacturing jobs to China, service jobs picked up some slack, but now even those jobs are threatened by automation. Economists will tell you that worker retraining is the solution, if workers retrain to climb the skills ladder, they will get white collar jobs. The problem is that automation is also climbing the skills ladder, and taking those white collar jobs. The chart below shows corporate finance jobs per billion dollars of revenue. Those jobs have already declined 40% in the last decade. This happened because of smart software that has taken on those roles. Automation is taking over the jobs university graduates used to take. This means that our traditional solution of education is no longer a guarantee of a job.


All of this means that jobs will be harder to come by and will disrupt consumers. No jobs, no money to buy things. It is at this point that economists go back to talking about Uber and Task Rabbit, pointing out that freelancing and paid activities are taking the place of jobs. Paid activities? You will of course notice the people telling us this already have jobs, and political economists are so full of shit that not even A.I. can do their jobs.

Source: Martin Ford on the Rise of the Robots – Youtube

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