Sunday, June 25, 2017

I. Told. You. So.

But then you, like everybody else, would not listen to me!

In many posts here, I worried about the rapid annihilation of jobs in the retail industry.  In recent posts, like here and here, I expressed my concerns that unlike previous economic revolutions, this will not lead the displaced workers into more productive jobs.  Automation is king, of course,

It is not that the retail job losses are only in large metropolitan areas.  Nope.  They hit hard--perhaps even hardest--the very areas that also coincide with the regions that elected trump, whose empty rhetoric on coal and manufacturing apparently swayed the voters:
Small cities in the Midwest and Northeast are particularly vulnerable. When major industries left town, retail accounted for a growing share of the job market in places like Johnstown, Decatur, Ill and Saginaw Mich. Now, the work force is getting hit a second time, and there is little to fall back on.
Moreover, while stores in these places are shedding jobs because of e-commerce, e-commerce isn’t absorbing these workers. Growth in e-commerce jobs like marketing and engineering, while strong, is clustered around larger cities far away. Rural counties and small metropolitan areas account for about 23 percent of traditional American retail employment, but they are home to just 13 percent of e-commerce positions.
E-commerce has also fostered a boom in other industries, including warehouses. But most of those jobs are being created in larger metropolitan areas, an analysis of Census Bureau business data shows.
Of course that is the story.  Any lame-brained pretentious economic geographer in small town Oregon could have told you that!
“Every time you lose a corner store, every time you lose a restaurant, every time you lose a small clothing store, it detracts from the quality of life, as well as the job loss”
Yes, that is exactly how the downward spiral happens.  While in the aggregate customers are all better off thanks to the efficiency offered by e-commerce and automation, the impacts are local and tangible.  

As I have often argued here, politicians need to, therefore, rework the social contract and strengthen the safety net.  Instead, trump and his (adopted) party are hell bent on shredding even the minimal safety net of today.

This situation will only worsen with the increasing level of automation that we can and should expect.  So, what can be done?
Part of the answer will involve educating or retraining people in tasks A.I. tools aren’t good at. Artificial intelligence is poorly suited for jobs involving creativity, planning and “cross-domain” thinking — for example, the work of a trial lawyer. But these skills are typically required by high-paying jobs that may be hard to retrain displaced workers to do. More promising are lower-paying jobs involving the “people skills” that A.I. lacks: social workers, bartenders, concierges — professions requiring nuanced human interaction. But here, too, there is a problem: How many bartenders does a society really need?
Exactly.  It is not as if we need a gazillion bartenders and waiters.  Right?

So, can we think creatively in another way? 
The solution to the problem of mass unemployment, I suspect, will involve “service jobs of love.” These are jobs that A.I. cannot do, that society needs and that give people a sense of purpose. Examples include accompanying an older person to visit a doctor, mentoring at an orphanage and serving as a sponsor at Alcoholics Anonymous — or, potentially soon, Virtual Reality Anonymous (for those addicted to their parallel lives in computer-generated simulations). The volunteer service jobs of today, in other words, may turn into the real jobs of the future.
If trump and his (adopted) party cannot even understand how retail jobs vastly outnumber coal mining jobs, there is no way on earth will they even begin to understand that paragraph!
Who will pay for these jobs? Here is where the enormous wealth concentrated in relatively few hands comes in. It strikes me as unavoidable that large chunks of the money created by A.I. will have to be transferred to those whose jobs have been displaced. This seems feasible only through Keynesian policies of increased government spending, presumably raised through taxation on wealthy companies.
Yep, this will take reworking the social contract by increasing the tax on the gazillionaires--not by offering them more tax cuts!

Anything else that will be restatement of what I have been talking about and writing about for ever?
As for what form that social welfare would take, I would argue for a conditional universal basic income: welfare offered to those who have a financial need, on the condition they either show an effort to receive training that would make them employable or commit to a certain number of hours of “service of love” voluntarism.
To fund this, tax rates will have to be high. The government will not only have to subsidize most people’s lives and work; it will also have to compensate for the loss of individual tax revenue previously collected from employed individuals.
If only you would listen to me!

Here is the most interesting twist; the author of that essay, on how to deal with the increasingly sophisticated automation that borders on artificial intelligence, is:
Kai-Fu Lee is the chairman and chief executive of Sinovation Ventures, a venture capital firm, and the president of its Artificial Intelligence Institute.
Some day, sooner than later, there will be a few people who will regret not having listened to me ;)


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