Robopocalypse now?

Apart from the family house, the biggest purchase people tend to make is their car. Before the car was invented however, it was most likely their piano. At the turn of the 20th Century, pianos were an essential part of life. They were the home entertainment system of the era, the only mechanism for bringing music into the household.

Peak-piano hit in 1905. Steinway, the world’s largest piano producer, was producing around 400,000 pianos a year out of New York. Thousands more were produced by hundreds of smaller manufacturers scattered throughout the city. On top of that, sheet music was big business, as was piano tuning.

It didn’t last. Technology started to threaten Big Piano’s monopoly on the household music scene from about 1915. The invention of the phonograph, the record player and later the radio meant that you could now have music in the house without undertaking hundreds of hours of tedious practice.

The new technology also meant that you didn’t need all those pianos to be manufactured, nor the workers employed to make them. The industry went into a deep decrescendo. In the ultimate metaphor of a dying industry — Steinway started manufacturing coffins in the 1940s as a means to run down stocks of surplus timber.

The decline of the piano industry is a familiar one that can be retold for countless industries affected by technological change. However, while we lament the job losses, what this story forgets to mention, are the jobs created elsewhere. Many, many, many times more jobs have since been created in broadcasting, music and film then were ever lost in piano manufacturing.

Productivity growth is all about doing more with less. Often this will mean that those processes which automate labour — tractors, robotics, conveyor belts, algorithms etc — will mean less labour is required to do the job. That’s certainly been the case with agriculture and many parts of manufacturing. Machines and robots are typically great at lifting heavy things and undertaking repetitive tasks at pace.

In other cases however, productivity growth has bolstered employment. Significant increases in the productivity of the healthcare for example, have improved the quality of those services. This has been matched by an increase in their demand, and employment has followed. That’s true for a lot of the professional services.

And in other cases, productivity growth in one sector has spillover effects onto another. That’s what we see in the piano story. Another example would be the rise of the automobile. While the introduction of the automobile led to the decline of horse-drawn transportation, it also led to the creation of countless jobs in tourism, as well as birthing an entirely new industry of road construction.

Autor and Salomons have written a recent paper looking at how these effects net out (attached). 74 pages later, they find that recent productivity growth has been employment-augmenting rather than employment-reducing. Automation, technology and productivity growth creates jobs in the aggregate, but can be quite disruptive for different classes of skills.

There has never been more interest in the “future of work” or “automation” than there is right now. (Literally! I looked it up on Google Trends — see chart.) Perhaps with good reason. The potential for technology to disrupt on a large scale and at pace seems to be greater than ever. Moreover, technology is threatening what were meant to be safe, highly educated white collar jobs.

Interest in “future of work” and “automation” — Google trend analysis

Notes: Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term.

Source: www.trends.google.com.au

As robots and algorithms become smarter than humans (in addition to being stronger and faster), what’s left? The challenge might not be the quantity of jobs, but the quality. Robots can land aeroplanes and trade shares on Wall Street, but they can’t clean toilets…

The greatest megatrend is the one that that people don’t seem to talk about. It’s that things tomorrow are probably going to look quite similar to today. Sure, technology will continue to improve, but there are circuit breakers in place (such as changes in relative prices and other market signals) that can help prevent dramatic wholesale changes from occurring overnight. There are still many things that humans can do better than robots. Computers are not great at tasks requiring social, creative or perceptive skills. Occupations that require those skills will be in greater demand in the future — a trend that we’re already observing.