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In case you haven't heard, the software giant Google has debuted a new fully automated, driver-less car. Not only are the prototypes fully functional, they have also already logged a combined 140,000 miles of unassisted driving on U.S. roads. Google itself estimates that the system may be ready for full-scale production in eight years, before the decade is even out.
An eight-year period may seem overly optimistic, but it actually makes a lot of sense in context of computer systems. An observed phenomenon known as 'Moore's Law' states that the processing power of a standard desktop computer roughly doubles every two years, for the same cost. If Moore's law remains constant, then by 2020, the standard desktop should have the processing power of somewhere between the mind of a monkey and of a human - in other words, more than enough power to navigate traffic with the right software.
What does this mean for the economy? On the one hand, it will mean more efficient roads, lower costs of transportation, and cheaper costs of goods. On the other hand, there are an estimated 3.5 million truck drivers currently employed in the U.S., and this field is one of few which offers prospects of a middle-class income without a college degree. On top of this, consider the hundreds of thousands of bus, taxi and limousine drivers - and that similar technology will likely be simultaneously be rolled out for shipping, rail, forklift, crane operations, etc (indeed, to small degrees it already has).
You might remember how a few years ago, a GPS unit or a smart-phone were extravagant luxuries, but now are so common as to be unremarkable. There is no reason to believe that driver-less car technology will not be adopted with similar speed. Unlike smart phones, however, automated driving will cause massive and simultaneous layoffs.
If this were only happening in the transportation sector, I would not argue that it constitutes a paradigm shift in economics. This trend is however driven by computing speed, which is applicable to the great majority of fields and sectors. In other words, job destruction is and will be happening more rapidly than job creation in the majority of economic fields. The Google Car is a case in point - reportedly, only 15 engineers are responsible for the creation of its working prototypes, while it may someday soon make 15 million or more jobs obsolete around the world.
In the twentieth century, increased production by capitalists required increased labor forces, and increased payrolls, which created an automatic feed-back loop where more production led to more economic demand, and so on. Computer technology, and to a lesser degree other advances, are breaking this feedback loop.
This is presenting us with an entirely new economic paradigm, where production of goods is only loosely linked to human labor, and it is presenting us with two divergent paths as a species.
The first path is where 20th century economic paradigms remain in place long after their practical obsolescence, and consumption of goods remains rigidly connected to production or ownership. In this world, there are fewer and fewer decent jobs available except to a technocratic elite, and corporate cyborg-like entities compete with one another to enrich a shrinking ownership class to the exclusion of the growing underclass. If you look, you can see evidence of this taking place all around you.
In the second path, productivity gains are partially socialized while markets remain free - in other words, a portion of the increased productivity made possible by the new technologies is redistributed into a guaranteed national income, or welfare which is available to all, permanently, regardless of ability or even desire to find employment. In this world, work becomes wholly a choice, as subsistence is possible and even guaranteed regardless, but markets remain free and wealth accumulation is otherwise uninhibited, except through nominal (and possibly decreasing) tax rates. A musician for example could choose to charge at his concerts and become wealthier (or afford better equipment), or play for free and subsist happily on his guaranteed income. A capitalist could accumulate major holdings of industry, become world famous, accumulate toys and properties, be a player in the advancements in the latest fields, and he could also rest assured knowing that even if all his investments go bankrupt tomorrow, he can still live a full and comfortable life without the charity of others.
In any case, it is doubtful that millions of truck drivers unemployed en masse will take it lying down, or be content with a few months of unemployment checks and little prospects beyond that. Which direction society takes is likely to depend heavily on politics. Democratic nations (in the sense of nations which implement the desires of the majority as polivy, as distinguished from nations with mere formalities like elections) will tend toward the second path, while nations where money decides policy will tend towards the first, and the morass of third-worldism.
In neither case will there be top down, Soviet style control of the economy - in both cases markets will be free, on the one hand free to command humans, and on the other hand free to serve humanity. But one thing which is clear is that 20th Century paradigms will not work for understanding 21st Century economic crises, and these crises will not be resolved until the economically-minded stop looking towards long-dead theorists of long dead economic systems, and start looking at the object in front of their face they are typing into.
What Sieben said.
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"Even when leftists talk about discrimination and sexism, they're damn well talking about the results of the economic system" ~Neodoxy
and the PDF of his report: http://www.brookings.edu/~/media/Files/rc/papers/2010/04_jobs_autor/04_jobs_autor.pdf
http://www.brookings.edu/~/media/Files/rc/papers/2010/04_jobs_autor/04_jobs_autor.pdf
Haha. Center for American Progress. Big surprise.
I was being sarcastic, of course
Okay, cool! Just making sure! It's hard to tell online sometimes with everyone.
I'm guessing what will happen we will no longer need to each own a car, think of just paying a monthly fee or per mile fee for a car... The thing picks you up at your home after you contact it with your mobile phone, drops you off and goes and picks up someone else all automated... No parking, maintenance, or insurance to worry about and you can get work done in transit.
I'm looking forward to it
We wouldn't need nearly as many cars and they would actually reach the economies of scale that I don't think we realize in todays market, they could just be generic looking because everyone would ride in one or more likely they would have advertisements on them, for some reason I imagine they wouldn't be like a standard car more like a small room pod type thing.
Also if petrol gets too expensive they could convert them economically and fuel them at their stations I feel it would be an easier transition to hydrogen or whatever
As they gradually produced enough we would eventually reach a state where we would end up spending much much less as a % of our income on transportation. and a lower % of the population would be needed to supply it.
I'm trying to figure out how you are conflating armed conflict with technological innovation... besides trying to warn us that we should never say never, that is?
And this line:
"He's also not painting a picture where everyone is unemployed - but a world where you're either a high paid professional or capitalist, or a low paid dishwasher, with not very much opportunity in the middle."
... is this the beginning of some sort of Marxist class warfare argument? I think so. I see this as the opening salvo in such a statement, since the only 'natural' conclusion that can be drawn from it is that "low paid dishwasher[s]" won't have access to all that technology.
"All men having power ought to be distrusted to a certain degree." -James Madison
"If government were efficient, it would cease to exist."
The "Coming" Collapse of the Middle Class:
http://www.youtube.com/watch?v=akVL7QY0S8A
Unlike David Autor, I would argue that even a lot of "high skill, high education" jobs are going to be cut from automation - think TurboTax shrinking the market for accountants, or online streaming lectures and discussion chat rooms making university class room ssizes potentially infinite.
I'm involved in the design/architecture field, and while computers can't really design things, they can make it easier and quicker, and the internet makes it possible to easily outsource even architecture design - a firm in Singapore can design a building in Utah, email the blueprints in Google Sketchup (which is easy to learn in the first place and free to download), and then stay in touch with the client via Skype to make revisions. This is leading to a hyper-competitive global market with fewer firms and fewer employees cranking out more projects at a higher rate.
You make it sound like this is a bad thing.
Of course the purpose of every invention is be more productive, which includes less man hours to make the same amount of product.
Dp you drive a car? Use anything at all with wheels? Do you realize how many jobs you are destroying by doing that? How many people would have jobs transporting you and your stuff from place to place on their backs? And don't tell me riding a horse or using beasts of burden for any purpose, that destroys jobs for humans, too.
Now we are on the subject, you are being hypocritical using a computer. A quill pen and old fashioned ink would require much more labor to send out your message to us all. Cut off your phone and electricity while you are at it. You Job Destroyer, you.
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It's easy to refute an argument if you first misrepresent it. William Keizer
Smiling Dave:You make it sound like this is a bad thing.
Cognitive dissonance.
"zomg!!! that's like an elevator without an elevator operator!!!"
Minimum wage laws actually killed those guys off. *Mentioned in one of Walter Blocks lectures.
"Unlike David Autor, I would argue that even a lot of "high skill, high education" jobs are going to be cut from automation - think TurboTax shrinking the market for accountants, or online streaming lectures and discussion chat rooms making university class room ssizes potentially infinite."
So you would be against a national sales tax solely because it's simplification of the tax code would put accountants out of work?
Not to derail the topic, but is google really releasing these cars for sale/rent to the masses in the near-future? Or is it only the technology that will be ready then and we'll have to wait x number of years before it gets through the yellow tape?
This thread hurts my intelligence.
Don't forget that the photography and tourism industries will be dead, too.
And who can compete with free phone service like google just provided? The telephone industry will be out of business.
gmail has destroyed the postal services; leaving postmen to starve.
Internet forums used to be guys who would write something on a piece of paper and then drive all over town showing it to people. Now those guys are dead.
Michelangelo: Not to derail the topic, but is google really releasing these cars for sale/rent to the masses in the near-future? Or is it only the technology that will be ready then and we'll have to wait x number of years before it gets through the yellow tape?
Not near future, no announcements or anything about that. Its in the experimental phase. This is not the only thing google is doing anyways of course, besides their web apps, theres like http://blog.mises.org/14216/google-amazes/
John Ess: And who can compete with free phone service like google just provided? The telephone industry will be out of business.
Not to be fussy, but I use google voice, and they only bridge calls from already existing lines and numbers. But its true that the telephone industry will be out of business when every physical line converts to digital VoIP!
Boy, that's a lot of truckers and taxi drivers that are going to go on to do more productive things than before. Capitalism wins again! That's what you were driving at, right? Don't mind the pun.
"The greatest failing of the human race is its failure to understand the exponential function."
~ Physicist Dr. Albert Bartlett
The exponential function is best illustrated by a parable of a a Chinese Sage who does a great favor for an Emperor. The Emperor invites the Sage over for a game of chess and asks what he can do in return as thanks. The Sage replies that he has only one request - a chessboard with one grain of rice on the first square, two on the second, four on the fourth, doubling on each square for the entire board. The Emperor assents, thinking it will be a small amount of rice. Were the Sage's request to be fulfilled, however, the amount of rice required would bury the entire Earth to a depth of several miles.
Computer speed is growing at an exponential rate - doubling every two years. Today a new desktop might have the brain power of a mouse - in ten years at most it will have the processing power of the mind of a monkey. In twenty years at most it will have the processing power of a human.
Currently we are seeing jobs disappear which can be done by "mouse power" computers - this is why unemployment is growing all around the world, simultaneously. These jobs tend to be "middle skill" jobs. Soon they will be "high skill" jobs. Then they will be nearly all jobs - and the entire economy will be able to function with only a small percentage of the population doing any work. If work is still required for income, this means only a small portion of humanity will survive as more than peasants.
Theories about corrupt governments and incompetent central banks can explain a crisis here or there, but not a simultaneous, systemic world crisis. For that, systemic, causes have to be sought which are equally systemic and simultaneous.
Before the industrial revolution, economics was extremely simple - however owned the most high quality land and lorded over the most peasants was the richest - end of story. Then industrial production came along, and a capitalist with a few factory buildings could become richer than Dukes and Counts and Princes. The paradigm had changed, and the fundamental economic laws had changed too. Medieval treatises on economics became obsolete, but not because Medieval people did not understand economics, but because Medieval economic systems no longer existed, just as even a perfectly accurate treatise on techniques Medieval warfare would be hardly applicable on a battlefield today, even if it perfectly grasped the issues of its time.
We're in the midst of a paradigm change, and the people who cling to old economic treatises will cause destruction comparable to generals relying on calvary charges against machine guns.