The Lights in the Tunnel Automation Accelerating Technology and the Economy of the Future_3 pot

Acceleration / 45

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Astheir computers got fasterand faster, the quants
wereabletodomoreandmore.Theycreatednewexotic
derivativesbasedonstrangecombinationsofthings.They
could magnify the reward (and risk) of a security. They
could invertit,soyougainedifthesecurityfellinvalue.
Theycouldeventrytocapturetherewardifaninvestment
increasedinvalue,buteliminatetheriskifitwentdown—
oratleasttheythoughttheycould.
Ashousingpricescontinuedtoclimbduringthebub-
ble, the subprime loans were packaged into mortgage-
backedsecuritiessothattheycouldbetradedlikebonds.
This had become standardpracticeformortgages. How-
ever, in addition to that, new types of derivatives were
createdbasedonthepackagedsubprimeloans.Mostnot-
able were “collateralized debt obligations” (or CDOs),
which attempted tosiphonoffthelowest risk loans and
repackagethemintoasecuritythatcouldbemarketedasa
high quality investment. These new derivative securities
werethensoldtobanksandfinancialinstitutionsallover
theworld,withtheunderstandingthattheywereverylow
riskinvestments.
Whenthesubprimeborrowersstarteddefaulting,the
valueofthemortgage-backed securitiesplunged,andthe
derivativesdidnotworkasexpected.Inmanycasesitwas
difficultorimpossibletocalculatetheirvalue.Inaddition,
financialinstitutionshadengagedinmanyothercomplex
interrelationships based on exotic derivatives that were
intendedtohelpmanagevariousrisks.Allthisledtoun-

certaintythatcausedvaluestofallevenmore. Theresult
THE LIGHTS IN THE TUNNEL / 46

CopyrightedMaterial–Paperback/Kindle available @ Amazon
wasthedownfallofBearStearnsinMarch2008,andthe
globalcrisisthatfollowed.
The point of this, of course, is that it would have
beenimpossibletocreatetheseweirdderivativeswithout
accesstoverypowerfulcomputers.Ifthesubprimecrisis
hadoccurredinearlieryears,itwouldcertainlyhavebeen
a far smaller event. It’s worth noting that the meltdown
startedin2007.Aswearenowin2009,weknowthatthe
powerofthecomputersonWallStreetdeskshasroughly
doubled,evenasthecrisishascontinued.
Exoticderivativesare,ofcourse,nottheonlyexam-
ple of the dramatic impact of advancing computer tech-
nology on financial markets. On October 19, 1987, the
stock market fell a staggering twenty percent in a single
day.Therewasreallynospecificnewseventorotherfac-
tor thatmighthaveexplainedthesuddendrop. Manyof
the people involved in quantitative technologies on Wall
Street at the time believe that the crash may have been
precipitated by computer programs that traded autono-
mouslyinthehopeofproviding“portfolioinsurance”for
biginvestors.
Asthisis beingwritten,articlesare appearinginthe
pressregardingtheuseofextremelyfastWallStreetcom-
putersthatallowtransactionsto beexecutedinfractions
ofasecond. Thispractice,known as“flashtrading,” has
quicklyattractedthenoticeoftheSecuritiesandExchange

Commissionandmayresultinnewregulation.
Astheseexamplesshow,wecanexpectthattherate
ofchangeandthevolatilityofnearlyeverythingaroundus
will be somehow amplified by the incredible increase in
Acceleration / 47

CopyrightedMaterial–Paperback/Kindle available @ Amazon
ourabilitytocompute.Wecanalso certainlyexpectthat
thisdramaticallyexpandedcomputationalcapacitywillbe
focusedincreasinglyonautomatingourjobs.
Laterinthischapter,we’lllookinmoredetailatsev-
eral specific advancing technologies and how theymight
impact the job market and the economy in general. But
first,let’snowturnfrommachinestohumanbeings.Isit
possiblethatwecansomehow“outrun”computerssowe
canallkeepourjobs?
Diminishing Returns
In1811,EnglandwasinthemidstoftheIndustrialRevo-
lution. That year, a group called the Luddites formed in
Nottingham. The Luddites consisted of skilled textile
workers who felt threatened by the introduction of me-
chanical looms that could be operated by low-paid, un-
skilledworkers.Theytooktheirnamefromamannamed
NedLudwhohadreportedlydestroyedoneof thesead-
vanced looms. The Luddites’protests grew into outright
riotsanddestructionofmachines.TheBritishgovernment
finallyenactedharshmeasuresandthemovementcameto
an end in 1812. Since then, the word “luddite” has, of
course,evolvedintoasomewhatderogatorytermforany-
oneopposedtotechnological progressorillequippedto

dealwithnewtechnologies.
Economistsgenerallydismisstheideathatadvancing
technology will ever permanently displace humans and
thereby continuouslyincreasethe unemployment rate.In
otherwords,mostmainstreameconomistsfullyacceptour
assumption at the beginning of this chapter. (Not the
THE LIGHTS IN THE TUNNEL / 48

CopyrightedMaterial–Paperback/Kindle available @ Amazon
“2089” version; the never one.) Those who have raised
concerns in more recent times are dismissed as “neo-
Luddites.” Economists have also formulated something
calledtheLudditefallacytohelpexplainwhytheconcerns
of neo-Luddites are wrong. We’ll look at this in a little
moredetaillater.
Obviously, England is now a modern country, and
the vast majority of workers still have jobs. The British
peoplearenowfarbetteroffthantheywerein1812.So
weretheLudditeswrong?Orjusttwohundredorsoyears
tooearly?
Weknowthattechnologyhasadvancedtremendously
since1812.Whatabouthumanbeings?Haveweadvanced
aswell? In termsof basicbiology, we areessentially un-
changed. Little if any biological evolution takes place in
onlytwohundredyears.Still,doesn’titseemlikelythatthe
average British worker today is far more capable than a
typicalworkernearlytwohundredyearsago?
Let’simaginewhatlifewaslikeforanaverageEnglish
personin1812.Asitturns out,it’seasytoget somein-
sightinto this becauseCharlesDickens was bornin that

exactyear.Dickensdrewonhisownexperiencesandob-
servationsasachildwhenhelaterwrotehisfamousno-
vels.Hisdescriptionsofaharsh,poverty-strickensociety
and an environment made filthy by the soot from coal-
burningindustryarewellknown.
InOliverTwist,Dickensdescribesthemiserablelifeof
anorphanboyduringtheIndustrialRevolution.Herehe
expresseshisfeelingsasthestarvingOliverisgivenscraps
ofmeatthathadfirstbeenofferedtoadog:“Iwishsome
Acceleration / 49

CopyrightedMaterial–Paperback/Kindle available @ Amazon
well-fed philosopher, whose blood is ice, whose heart is
iron;couldhaveseenOliverTwistclutchingatthedainty
viands the dog had neglected.I wish he could have wit-
nessedthehorribleaviditywithwhichOlivertorethebits
asunderwithalltheferocityoffamine.”
15

Clearly, the average British worker is far better fed
today.Weknowtheenvironmentisalsomuchcleanerand
more healthy. The literacy rate in Britain today is pur-
portedtobeashighas99percent.It’shardtoknowwhat
itwasin1812,butaround50percentmightbea decent
guess—andofcourse,theabilitytoreadandwritewould
havebeenhighlyconcentratedintheupperclasses.
In 1812, there was essentially no public education
available in England. The government did not begin to
investsignificantlyineducationuntil1870,andattendance
was not compulsory until 1880. Obviously, the average

workertodayisfarbettereducatedthanheorshewould
havebeenin1812.
Givenallofthis,wecansaythat,duetodramaticim-
provementsinlivingconditionsandeducation,anaverage
worker today is certainly more capable and able to per-
form more complex, high-level tasks than a worker in
1812.Buttherealquestionis:canweexpectthatkindof
improvementtocontinueinthefuture?
Thefollowinggraphshowswhatanaverageworker’s
abilitytoperformcomplextasksmightlooklikeoverthe
pasttwohundredorsoyears.Thegraphicisjustanintui-
tiveestimate.Itisnotbasedonanyrealdata.However,I
suspect that most people would agree with the general
shapeofthegraph,andthatisallthatreallymatters.
THE LIGHTS IN THE TUNNEL / 50

CopyrightedMaterial–Paperback/Kindle available @ Amazon

Average Worker’s Ability to Perform Complex Tasks








I’vechosenanarbitrarypointonthegraphtoindicate
theyear1812.After thatyear,wecanreasonablyassume
thathumancapabilitycontinuedtorisequitesteeplyuntil

we reach modern times.The steep part of thegraph re-
flectsdramaticimprovementstoouroveralllivingcondi-
tionsintheworld’smoreadvancedcountries:
 Vastlyimprovednutrition,publichealth,andenvi-
ronmental regulations have allowed us to remain
relativelyfreefromdiseaseandreachourfullbio-
logicalpotential.
 Investmentinliteracyandinprimaryandsecond-
aryeducation,aswellasaccesstocollegeandad-
vancededucationforsomeworkers,hasgreatlyin-
creasedoverallcapability.
 A generally richer and more varied existence, in-
cludingeasyaccesstobooks,media,newtechnol-
ogies and the ability to travel long distances, has
probably had a positive impact on our ability to
comprehendanddealwithcomplexissues.
Luddites riot - 1812
Time
Average
Human
Capability
Acceleration / 51

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Thedegreeofimprovementthatwehaveseen,how-
ever,islargelyrelatedtothelowlevelatwhichthingsgot
started.In educationinparticular,weseemtohavehit a
ceiling—andmayactuallybeseeingsomeevidenceofde-
cline.IntheUnitedStates,themediaisrepletewithacon-
tinuingparadeofstoriesabouttheongoingcrisisinboth

primaryandsecondaryeducation.
IntheU.S.,wearenotevensurewhattheactualhigh
schoolgraduationrateis.Apaperpublishedin2008bythe
NationalBureauofEconomicResearch
16
pointsout that
“Dependingonthedatasources,definitions,andmethods
used, the U.S. graduation rate has been estimated to be
anywherefrom66to88percentinrecentyears—anasto-
nishinglywiderangeforsuchabasicstatistic.Therangeof
estimated minority rates is even greater—from 50 to 85
percent.”ArecentlypublishedstudybytheNationalCen-
terforEducationStatistics
17
showedthatover14percent
ofadultsintheUnitedStatesmaylackbasicreadingskills.
Itseemsselfevidentthatifasmanyasathirdofourchild-
renareunabletograduatefromhighschoolandupto1/7
of ourpopulation fails to achieve basic literacy, then we
arenotsucceedinginsignificantlyadvancingthecapability
oftheaverageworker.
Even the earlier trends toward improved nutrition
andpublichealthhave,inmanyways,turnedagainstus.In
mostWesterncountrieswenowhavearagingobesityepi-
demicamongtheadultpopulation,and—mostdisturbing-
ly—alsoamongchildren.Whileadvancesinmedicinecon-
tinue,manyofthesebreakthroughsseemtoprimarilyim-
pact the health of retirement-age people. The overall
THE LIGHTS IN THE TUNNEL / 52

CopyrightedMaterial–Paperback/Kindle available @ Amazon
healthofouryoungerpopulationisstagnantor, insome
cases,perhapsevendeclining.Inrecentyears,oneofthe
fewpositivestoriesinthepublichealthandnutritionarena
hasbeenthedeclineinthesmokingrate.
While the last graph was just an estimate, here is
anothergraph
18
thatisbasedonactualdata:

TheaveragemathscoreonSATtestsadministeredby
theCollegeBoardhasremainedessentiallyflatforthepast
35years.Thegraphforaverageverbalscoreslooksvirtual-
lyidentical.College-boundstudentsthattaketheSATare,
ofcourse,probablyaboveaverageinturnsofworkcapa-
bility.Itseemsprettyclearthat,intermsofincreasingthe
capabilityofouraverageworkers,wehavealreadypicked
thelow-hangingfruit,andwearestrugglingjusttomain-
tainthingsattheircurrentlevel.
Atthispoint,weshouldhaveaprettygoodsensethat
if computer technology continues to progress at the ex-
Average SAT Math Scores 1972-2007
0
100
200
300
400
500
600
700

1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
Year
Average Math Score
Acceleration / 53

CopyrightedMaterial–Paperback/Kindle available @ Amazon
traordinaryratewehaveseenintherecentpast,thenhu-
man workers will not be able outrun machine capability.
Youcanseethisvisuallywiththetwographsbelow:
Human Capability v. Computer Technology












Whilethesetwographsarenotbasedonanyspecific
data,wehaveshownprettyconvincinglythattheirshapeis
moreor lesscorrect.Weknowthatthelower(computer
technology) graph currently lies somewhere below the
human average capability graph. And we know that the
technology graph is increasing at an exceptionally fast
geometric pace.Whatelsedo weneed toknow? Clearly,
thelinesseemverylikelytointersectatsomepointinthe
future.
*



*
IfyouarefamiliarwiththewritingsofThomasRobertMalthus,this
graphmaylookfamiliartoyou.In1798,MalthuspublishedhisEssays
on thePrinciple of Population in which he argued thatgeometrically in-
creasinghumanpopulationwouldoutstripsociety’sabilitytoproduce
food. In Malthus’ version of the graph above, the top (diminishing
returns)linerepresentsfoodproduction,whilethebottom(geometric)

Capability
to Perform
Routine Jobs
Computer Technology
Human Workers
Time
THE LIGHTS IN THE TUNNEL / 54

CopyrightedMaterial–Paperback/Kindle available @ Amazon
The continuing advance of computer technology
alongageometricallyincreasingpathandthediminishing
returnsfrominvestmentineducationseemtomakeavery
strong case that the average worker—and perhaps many
above-average workers—are in clear danger of having
theirjobsautomated.Next,let’slookatsometrendsand
specifictechnologiesthatshowexactlyhowthisislikelyto
happen.
Offshoring and Drive-Through Banking
Automationandoffshoreoutsourcinghaveoneimportant
thing in common: they are both driven by technology.
Obviously,itisthevastimprovementinourcommunica-
tionandinformationtechnologiesthathasenabledmany
service-oriented jobs to be relocated to low-wage coun-
tries.
WhenIwasgrowingupinthe1970s,Ioftenhadthe
opportunitytoseedrive-throughbankinginaction.This,
ofcourse,wasbeforetheintroductionofATMmachines.
Atypicalbankdrive-throughwassetupwithtwoorthree
lanessothatmultiplecustomerscouldbehandledatone
time. If you used the lane closest to the building, you


linerepresentspopulation.Hebelievedthatthetwolineswouldinter-
sectandresultinwidespreadfamine.Malthus,ofcourse,turnedoutto
be wrong largely because he failed to anticipate the technological
progressthatwouldoccurinfoodproductionandprocessing.Sodoes
that mean the graph above is just another “Malthusian” prediction

whichisalsodestinedtobewrong?Onethingtokeepinmindisthat
Malthusinessenceplacedhisbetagainsttechnology;thegraphabove
assumes exactly the opposite. We should also acknowledge the un-
happypossibilitythatMalthusmightstillbevindicatedinthefuture,
especiallyifclimatechangehasahighlynegativeimpactonagriculture.
Acceleration / 55

CopyrightedMaterial–Paperback/Kindle available @ Amazon
communicated with the teller through a standard cash
drawer.
Ifyouwereinoneofthelanesfurtherout,however,
thingswerefarmoreinteresting.Yousealedyourmoney,
paperwork,checkbook,etc.intoaplasticcylinderandthen
droppedthe cylinder into theprovidedopening.Thecy-
linder then traveled through an underground tube—
propelled I think by some sort of vacuum mechanism—
untilitreachedtheteller.Shethencompletedthetransac-
tion and sent the cylinder back to you the same way. It
arrived somewhat like a ball being returned at a bowling
alley.
Atthetime,thisseemedveryhightech.Thesystem
haditsflaws,however.Iclearlyrememberwaitinginline
behind one unluckybank customerwho,failingto insert
the cylinder properly, watched it fall to the ground and
then rollunder his car. He then found that when he at-
temptedtogetoutandretrieveit,hewasunabletoopen
hisdoor.This,ofcourse,wasanuproarioussightforan
elevenor twelve year old. I would bewilling to bet that
another potential problem was customersforgetting they
stillhadthecylinderandsimplydrivingawaywithit.

Thistypeofdrive-throughbankhasnow,ofcourse,
followedinthepathofthedinosaurs.Todaythetechnolo-
gyseemsclunky.Atthetime,however,itrepresentedthe
leading edge of what was technically possible. Drive-
throughbanksprovidedausefulconveniencetocustom-
ersandalsooftenofferedextendedhoursofoperation.
ThepointIammakinghereisthatoffshoringisreally
a precursor of automation. Offshoring is what you do
THE LIGHTS IN THE TUNNEL / 56

CopyrightedMaterial–Paperback/Kindle available @ Amazon
when you have some technology, but not enough to fully
automate a job. Just as clunky drive-throughbankswere
eventuallymadeobsoletebyATMs,somanyjobsthatare
currentlybeingoffshoredwill,inthefuture,endupbeing
fully automated. This trend was already discernable in
2004, whenanarticleinInformationWeek pointed out that
“low-wage foreign labor may pose a threat to American
call-center workers, but their counterparts in countries
such as India and the Philippines themselves face being
replaced by increasingly sophisticated voice-automation
technology.”
19

ThisisoneofthereasonsthatIdidnotincludeoff-
shoringinourtunnelsimulation.Wecouldhavesimulated
anoffshoredjobasanaveragelightflickeringoutinone
part of the tunnel and then another somewhat dimmer
light appearing elsewhere. However, our simulation was
intendedtoshowwhatwouldhappenoverthelongrunas

automation gradually increased. As technology continues
itsrelentlessadvance,manyofthejobsnowbeingtrans-
ferredoverseaswillsimplydisappearaltogether.
Currently, most of the controversy and political de-
bate is focused is on offshoring rather than automation.
Thismaywellprovetobeashortsightedview.Informa-
tion technology (IT) workers in the developed nations
havebeenoneofthegroupshardesthitbyjoblossesfrom
offshoring. A 2006 study by the Organisation for Eco-
nomic Co-operation and Development (OECD)
20
 con-
cludedthatautomationhasresultedinmoreITjoblosses
thanoffshoringandpredictedthatthistrendwillcontinue.
Acceleration / 57

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Offshoringisthesmall wavethatdistractsyou.Automa-
tionisthebigonefurtheroutthatyoudon’tseecoming.
Short Lived Jobs
Theconventionalwisdomasgenerallypresentedbyecon-
omistsandotheranalystsisthattechnologycreatesjobs.While
history has shown that this is indeed true, it also shows
quiteclearlythatthenewjobtypescreatedbytechnology
areveryoftenthemselvesquickly vaporized by thesame
phenomenon. TheIT jobsthat are now being offshored
and automated are brand new jobs that were largely
createdinthetechboomofthe1990s.Forsomeonewho
choseIT as a promising career pathlittlemorethanten
yearsago,thiscanbeadishearteningreality.

Earlierinthischapter,Itoldofmyexperienceusing
computer punch cards at the University of Michigan. At
thetime,thesecardswereusedfornearlyeverything.The
utility bill you received in the mail was often a type of
punch card. As a result, there were thousands of “new”
jobs forkeypunch operators.Theselaterbecame“new”
jobs for data entry clerks sitting at computer terminals.
Now,ofcourse,technologiessuchasopticalbarcodesare
greatlyreducingtheneedforthistypeofdataentry.
Similarly,Imentionedthatmycollegefieldofstudy,
computerengineering,wasnewatthetime.Softwareen-
gineering isnowalso a highly offshored field, andmuch
progresshasbeenmadetowardautomatingsomepartsof
thesoftwaredevelopmentprocess.Acollegestudenttoday
mightwellthinktwicebeforeselectingthisrelativelynew
fieldthatwascreatedonlyaboutthirtyyearsago.
THE LIGHTS IN THE TUNNEL / 58

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Technology has always caused job transitions. Train
conductors have been largely replaced by airline flight
crews, for example. However, within the high tech and
computerfields,thepaceofchangeisunprecedentedand
continuestodriverelentlesslytowardthetotalelimination
ofjobs.Whatweareseeingisclearempiricalevidenceof
thegeometricincreaseinthepowerofcomputertechnol-
ogy.
Traditional Jobs: The “Average” Lights in the
Tunnel
Alltheattentionbeingfocusedonnewjobsbeingcreated

bytechnologytendstodistractusfromtherealitythatthe
bulkofthe job typesin oureconomyhave remained re-
markablystableovertime.Whiletechnologyhascertainly
impactedthewaypeopleinthesejobswork,orthetypes
ofbusinessesatwhichtheywork,ithasnotyetalteredthe
basicdefinitionsofthesetraditionaljobcategories.
Thetablethatfollowsisconstructedfromdatapub-
lished by the U.S. Bureau of Labor Statistics in May
2006.
21
ItlistsalltheoccupationsintheUnitedStateswith
atleastonemillionworkers.
Acceleration / 59

CopyrightedMaterial–Paperback/Kindle available @ Amazon
U.S. Occupations with at least one million workers (2006)
Occupation Number of
Workers
Percentage
of Workers

Retailsalespersons 4,374,230

3.3%

Cashiers 3,479,390

2.6%

Officeclerks 3,026,710


2.3%

Combinedfoodpreparationandserv-
ingworkers,includingfastfood
2,461,890

1.9%

Registerednurses 2,417,150

1.8%

Laborersandfreight,stock,andma-
terialmovers,hand
2,372,130

1.8%

Waitersandwaitresses 2,312,930

1.7%

Customerservicerepresentatives 2,147,770

1.6%

Janitorsandcleaners,exceptmaids
andhousekeepingcleaners
2,124,860


1.6%

Bookkeeping,accounting,andaudit-
ingclerks
1,856,890

1.4%

Secretaries,exceptlegal,medical,and
executive
1,750,600

1.3%

Stockclerksandorderfillers 1,705,450

1.3%

Truckdrivers,heavyandtractor-
trailer
1,673,950

1.3%

Generalandoperationsmanagers 1,663,280

1.3%

Elementaryschoolteachers 1,509,180


1.1%

Salesrepresentatives,wholesaleand
manufacturing,excepttechnicaland
scientificproducts
1,488,990

1.1%

THE LIGHTS IN THE TUNNEL / 60

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Executivesecretariesandadministra-
tiveassistants
1,487,310

1.1%

Nursingaides,orderlies,andatten-
dants
1,376,660

1.0%

First-linesupervisors/managersof
officeandadministrativesupport
workers
1,351,180


1.0%


Maintenanceandrepairworkers,gen-
eral
1,310,580

1.0%

Teamassemblers 1,250,120

0.9%

Teacherassistants 1,246,030

0.9%

Receptionistsandinformationclerks 1,112,350

0.8%

First-linesupervisors/managersof
retailsalesworkers
1,111,740

0.8%

Accountantsandauditors 1,092,960

0.8%


Secondaryschoolteachers,except
specialandvocationaleducation
1,030,780

0.8%

Constructionlaborers 1,016,530

0.8%

Securityguards 1,004,130

0.8%

TotalofOccupationsListedAbove 50,755,770

38.3%

AllOtherOccupations 81,849,210

61.7%

Total Employment 132,604,980

100.0%


Theseworkers makeup asignificant numberof the
averagelightsthatweautomatedaway in oursimulation.

Where are the “new” jobs created by technology? I can
findexactlyonejobmentionedinthislistwhichcouldnot
haveexistedin1930.Canyoufindit?Giveup?Fourlines
Acceleration / 61

CopyrightedMaterial–Paperback/Kindle available @ Amazon
from the top it says “including fast food.” McDonalds
didn’tintroducethefastfoodconceptuntil1948.
The job types listed in the table make up nearly 40
percentofalltheworkersintheUnitedStates.Eachofus
could probably also come up with dozens of other job
titles that have similarly remained unchanged for half a
centuryor more. Many of these are muchhigher paying
professionaljobs: doctors,dentists, CPAs,lawyers,archi-
tects,pilots,engineers,etc.Thefactisthatthevastmajori-
tyofourworkers continuetobeemployedintraditional
jobs.Thenewjobtypescreatedbytechnologyrepresenta
relatively small fraction of employment and, as noted
above,oftentendnottolastverylong.
Even within high technology industries, the bulk of
jobsaretraditionaljobs.Supposeyoufoundanewtech-
nology start-up company in Silicon Valley. You obtain
funding, and your companystarts to grow. Who do you
hire?Engineers,peopletoworkinaccounting,humanre-
sources, marketing and finance; administrative assistants
andpeopletoworkinshippingandreceiving:theseareall
traditionaljobs.ThepeopleworkingatGoogledonotall
haveweirdnew-agejobs;byandlarge,theyhavethesame
typesofjobsaspeopleworkingatGeneralMotors.What
needs to concern us is not just the number of new jobs

created by technology, butthe typesofjobs. Laterinthis
chapter, we will see that entire traditional job categories
areatriskofbeingheavilyautomatedinthenottoodis-
tantfuture.Tosuggestthattechnologyisgoingtosome-
how createcompletely newjob categoriescapableof ab-
THE LIGHTS IN THE TUNNEL / 62

CopyrightedMaterial–Paperback/Kindle available @ Amazon
sorbingmillionsofworkersdisplacedfromtraditionaljobs
ispurefantasy.
Whataretheimplicationsforoureconomyifalarge
fractionofthesetraditionaljobsareultimatelyautomated
away?Automatedcheckoutlanesarecurrentlyinuseata
numberofretailstores.Wecanbesurethatinthefuture,
these willbecome more reliable,easier to use, and more
popular.Whatwillwedoifsomedayasubstantialpercen-
tageofthethreeandahalfmillioncashiersintheU.S.no
longerhavejobs?Whatadditionaleducationandtraining
canweoffertheseworkers?Andwhatjobswoulditpre-
parethemfor?
And what is the impact of thatpotential unemploy-
mentonmarketdemandforgoodsandservices?Cashiers
aregenerallynothighlypaid,buttheynonethelessexistas
lightsinourmassmarkettunnel.Cashiers,justlikeother
workers,drivecars,buyclothesandconsumerelectronics,
rent DVDs, shop for Christmas gifts and perhaps drink
coffeeatStarbucks.Intermsofunitdemandformoderate-
lypricedpersonalproductslikecellphonesormp3play-
ers,acashiermaycountasmuchasacorporateCEO.
Manyofthejobslistedinthetablearealreadyinthe

processof being automated oroffshored.Otherswillbe
targetedintheverynearfuture.Millionsofotherworkers
in occupations that do not appear in the list are also at
highrisk.As wewill see,thisincludesmanyoccupations
that are not, by any means, either low-skill or low paid.
Allowing these jobs to be relentlessly eliminated by the
millions, without any concrete plan to handle the issues
thatwillresult,isaclearrecipefordisaster.
Acceleration / 63

CopyrightedMaterial–Paperback/Kindle available @ Amazon
A Tale of Two Jobs
A common misconception about automation is the idea
that it will primarily impact lowpaying jobs that require
fewskillsortraining.Toillustratethatthisisnotnecessari-
lythecase,considertwoverydifferentoccupations:ara-
diologistandahousekeeper.
Aradiologistisamedicaldoctorwhospecializesinin-
terpreting images generated by various medical scanning
technologies. Before the advent of modern computer
technology, radiologists focused exclusively on X-rays.
Thishasnowbeenexpandedtoincludealltypesofmedi-
cal imaging, including CT scans, PET scans, mammo-
grams, etc. To become a radiologist you need to attend
collegeforfouryears,andthenmedicalschoolforanother
four.Thatisfollowedbyanotherfiveyearsofinternship
and residency, and often even more specialized training
after that. Radiology is one the most popular specialties
fornewlyminteddoctorsbecauseitoffersrelativelyhigh
pay and regular work hours; radiologists generally don’t

needtoworkweekendsorhandleemergencies.
Inspiteoftheradiologist’strainingrequirementofat
least thirteen additional years beyond high school, it is
conceptually quite easy to envision this job being auto-
mated.Theprimaryfocusofthejobistoanalyzeandeva-
luatevisualimages.Furthermore, theparameters ofeach
imagearehighlydefined sincetheyareoftencoming di-
rectlyfromacomputerizedscanningdevice.
Visualpatternrecognitionsoftwareisarapidlydevel-
oping field that has already produced significant results.
Thegovernmentcurrentlyhasaccesstosoftwarethatcan
THE LIGHTS IN THE TUNNEL / 64

CopyrightedMaterial–Paperback/Kindle available @ Amazon
helpidentifyterroristsinairportsbasedonvisualanalysis
ofsecurityphotographs.
22
Realworldtaskssuchasthisare
probablytechnicallymoredifficultthananalyzingamedi-
calscanbecausetheenvironmentandobjectsintheimage
arefarmorevaried.
Radiologyis already subject to significant offshoring
toIndiaandotherplaces.Itisasimplemattertotransmit
digital scans to an overseas location for analysis. Indian
doctorsearnaslittleas10percentofwhatAmericanradi-
ologistsarepaid.
23
Aswesawearlier,automationwilloften
comerapidlyon the heelsof offshoring,especiallyifthe
jobfocusespurelyontechnicalanalysiswithlittleneedfor

humaninteraction.Currently,U.S.demandforradiologists
continuestoexpandbecauseoftheincreaseinuseofdi-
agnostic scans such as mammograms. However, this
seemslikelytoslowasautomationandoffshoringadvance
and become bigger players in the future. The graduating
medicalstudentswhoarenowrushingintoradiologyfor
itshighpayandrelativefreedomfromtheannoyancesof
dealingwithactualpatientsmayeventuallycometoques-
tionthewisdomoftheirdecision.
Nowlet’sturntoaverydifferentjob:thatofahouse-
keeper. A housekeeper, of course, doesn’t require any
formaleducationatall,butasyoumighthaveguessed,this
jobisactuallymuchhardertofullyautomatethanthera-
diologist’s.Totakeoverthehousekeepingjob,wewould
needtobuildaveryadvancedrobot—orperhapsseveral
robotstoperformvarioustasks.
Ifyouaskedthehousekeepertonamethemostdiffi-
cultpartofhisorherjob,youmightexpecttheanswerto
Acceleration / 65

CopyrightedMaterial–Paperback/Kindle available @ Amazon
becleaningthebathroomsorthewindows.Forourrobot,
however,thetrulydifficulttaskisprobablysomethingthat
isrelativelylight work forthehumanhousekeeper.Con-
sider what is involved in tidying up clutter in a typical
home. Forthehousekeeper, thisis easy. A humanbeing
can instantly recognize objects that are out of place and
canquicklyputthembackwheretheybelong.Buildinga
machinetoreliablydothesamethingisprobablyoneof
themostdifficultchallengesinrobotics.

Ahousekeepingrobotwouldneedtobeabletorec-
ognizehundredsoreventhousandsofobjectsthatbelong
intheaveragehomeandknowwheretheybelong.Inaddi-
tion,itwouldneedtofigureoutwhattodowithanalmost
infinite variety of new objects that might be brought in
fromoutside.
Designingcomputersoftwarecapableofrecognizing
objects ina verycomplexand variablefield of view and
thencontrollingarobotarmtocorrectlymanipulatethose
objects is extraordinarilydifficult. The task is madeeven
morechallengingbythefactthattheobjectscouldbein
manypossibleorientationsorconfigurations.Considerthe
simplecaseofapairofsunglassessittingonatable.The
sunglassesmightbeclosedwiththelensesfacingdown,or
withthelensesup.Orperhapstheglassesareopen with
the lenses oriented vertically. Or maybe one side of the
glassesisopenandthe other closed.And,ofcourse,the
glassescouldberotatedinanydirection.Andperhapsthey
are touching or somehow entangled with other objects.
Building and programminga robot that isableto recog-
nizethesunglassesinanypossibleconfigurationandthen
THE LIGHTS IN THE TUNNEL / 66

CopyrightedMaterial–Paperback/Kindle available @ Amazon
pickthemup,foldthemandputthembackintheircaseis
sodifficultthatwecanprobablyconcludethatthehouse-
keeper’sjobisrelativelysafeforthetimebeing.
Contrast the housekeeping robot’s complex visual
recognitionchallengewiththetaskofautomating thera-
diologist’sjob.Amedicalscanis,bydefinition,precisein

termsofitsscaleandorientation:youknowexactlywhat
youarelookingat.Youdon’tneedtoworryaboutdealing
withunknownobjectsorientedindifferentways.Infact,
theentirepointmaybesimplytolocatesomethingoutof
theordinary, suchasatumor.Itisalsomucheasier and
moreprofitabletopartiallyautomatetheradiologist’sjob.
Therewouldbelittlepointtobuildingahousekeepingro-
botthatcouldonlyclearupsomeoftheclutterinahome.
Ontheotherhand,ifyoucanautomate20percentofthe
radiologist’smoreroutinework,thenyoucanimmediately
eliminateoneoutoffiveradiologyjobs.
Noneofthisistosaythatthehousekeeper’sjobwill
neverbeautomated.Itisverylikelythatintenseresearch
anddevelopmentinroboticswilleventuallyproduceaso-
lution to even the most difficult problems. In addition,
robots already exist to automate a few of the housekee-
per’s moreroutine tasks.You can alreadypurchaseinex-
pensiverobotvacuumcleaners,andlargerindustrialfloor
cleaningrobotsarealsoavailable.AsTheEconomistpointed
out inJune 2008, “Robotsaregetting cleverer and more
dexterous.Theirtimehasalmostcome.”
24

Acceleration / 67

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Still, it seems likely that the radiologist’s job is at
higherriskofbeingautomatedinthenearfuture.
*
Abig

partofthereasonforthisisthattheradiologisthaswhatI
callasoftwarejob.
“Software” Jobs and Artificial Intelligence
WhenIspeakofa“software”job,Idon’tmeanthataper-
sonwhohasthejobnecessarilyworkswithorprograms
software.Isimplymeanthatautomationofthejobpoten-
tiallyrequiresonlysufficientlyadvancedsoftware.Inother
words, someone with a softwarejob could eventuallybe
replaced by a computersimilar to theone that currently
sitsonhisorherdesk.Thereisnoneedforroboticarms
or, in fact,any moving parts at all. Another, more com-
mon, term for people with software jobs is, of course,
knowledgeworker.
Software jobs are also highly subject to offshoring.
The conventional wisdom used to be that becoming a


*
Inreality,thereisanotherfactorthatmightslowtheadoptionoffull
automationinRadiology:thatis malpracticeliability.Becausethe re-
sultofamistakeoroversightinreadingamedicalscanwouldlikelybe
dire for the patient, the maker of a completely automated system
wouldassumehugepotentialliabilityintheeventoferrors.Thisliabil-
ity,ofcourse,also exists for radiologists, but it is distributedacross
thousandsofdoctors.However,itiscertainlypossiblethatlegislation
and/or courtdecisions will largely remove this barrier inthefuture.
Forexample,inFebruary2008,theU.S.SupremeCourtruledinan8-
1decisionthat,incertaincases,medicaldevicemanufacturersarepro-
tected fromproductliability casesaslongasthe FDAhas approved
the device. In general, we can expect that non-technological factors

such as product liability or the power of organized labor will slow
automationincertainfields,buttheoveralltrend will remainrelent-
less.
THE LIGHTS IN THE TUNNEL / 68

CopyrightedMaterial–Paperback/Kindle available @ Amazon
knowledgeworkerrepresentedthebestpathtoaprosper-
ous future. The advent of offshoring has increasingly
calledthispropositionintoquestion.Today,offshoringis
impacting knowledge workers across the board. Jobs in
fields such as radiology, accounting, tax preparation,
graphic design, and especially all types of information
technologyarealreadybeingshippedtoIndiaandtoother
countries.Thistrendwillonlygrow,andasIhavepointed
out previously, where offshoring appears, automation is
oftenlikelytoeventuallyfollow.
Theautomationofsoftwarejobsistiedcloselytothe
fieldofartificialintelligence.Whenmostofusthinkabout
artificial intelligence, we are quickly sidetracked into the
world of science fiction. We think of the robots C3PO
and R2D2 from the Star Wars movies, or perhaps the
HAL2000computerfrom2001:ASpaceOdyssey.Asare-
sultofthis,wehavebeenluredintothefalsebeliefthatin
order to replace us, machines have to become like us—
that,infact,theyhavetosomehowreplicateourhumanity.
Thisissimplynottrue.Howoftenhaseachofussaid
“Iamnotmyjob.”Or“Iworktolive;nottheotherway
around.”Howmuchofyourcompleteidentityasahuman
beingreallygoesintoyourjob?Outsideofwork,youmay
read books; listento a certaintype ofmusic. Maybeyou

haveahobbyorpassion.Perhapsyoufeelstronglyabout
politicsortheenvironment.Certainlyyoucaredeeplyfor
yourchildren,yourfamilyandothersclosetoyou.Collec-
tively, all this makes up who you are. Duplicating all of
thatinamachinecertainlyremainsintherealmofscience
fiction.Buthowmuchofallthatisreallyrequiredtodoyourjob?
Acceleration / 69

CopyrightedMaterial–Paperback/Kindle available @ Amazon
Thefactisthatthebarwhichtechnologyneedstohurdle
inordertodisplacemanyofusintheworkplaceismuch
lowerthanwereallyimagine.
To gain some insight into how artificial intelligence
worksintherealworld,let’sconsidercomputerchess.In
1989, Garry Kasparov, the world chess champion faced
offagainstaspecialcomputercalledDeepThought.Deep
ThoughtwasdesignedatCarnegieMellonUniversityand
IBM.Kasparoveasilydefeatedthemachineinatwogame
match.
In1996,Kasparovfacedanewcomputerdeveloped
by IBM called Deep Blue. Again Kasparov defeated the
computer.In1997,IBMcamebackwithanimprovedver-
sionofDeepBluethatfinallydefeatedKasparovinasix
gamematch.Thisrepresentedthefirsttimethatamachine
haddefeatedthetophumanchessplayer.
Since then, computer chess has continued to
progress.In2006,thenewworldchesschampion,Vladi-
mir Kramnik, lost a match against a German software
programcalledDeepFritz.WhileIBM’sDeepBluewasa
completelycustomcomputeraboutthesizeofarefrigera-

tor,DeepFritzisaprogramthatrunsonacomputerusing
twostandardIntelprocessors.Itseemshighlylikelythat,
inthenearfuture,aprogramlikeDeepFritz,runningon
virtuallyanycheaplaptopcomputer,willbeabletodefeat
thebestchessplayersintheworld.
Whenwethinkofwhatittakesforahumanbeingto
be a world chess champion, most of us would probably
agree that it takes a certain degree ofcreativity—atleast
within theconfinesofa highly definedsetof rules. Yet,