The Lights in the Tunnel Automation Accelerating Technology and the Economy of the Future_4 pptx

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chess moves, then why can it not also iterate through
every known legal argument since the days when Cicero
heldforthintheRomanForum?Wouldthisbea“lesser”
formoflegalcreativity?Perhapsitwould.Butwouldthat
mattertoourlawyer’semployer?
Althoughthepracticalapplicationsofartificialintelli-
gencehavesofaremphasizedbruteforcesolutions,itisby
nomeanstruethatthisistheonlyapproachbeingtakenin
thefield.Averyimportantareaofstudyrevolvesaround
theideaofneuralnets,whichareaspecialtypeofcomputer
thatisbuiltuponamodelofthehumanbrain.Neuralnets
are currently being used in areas such as visual pattern
recognition. In the future,we canprobablyexpect some
importantadvancesinthisarea,especiallyastheengineers
whodesignneuralnetswork morecloselywithscientists
whoareuncoveringthesecretsofhowourbrainswork.
Onethingthatprobablyjumpsoutatyouaswespeak
oflawyersandradiologistsisthatthesepeoplemakealot
of money. The average radiologist in the United States
makesover$300,000.Infact,wecanreasonablysaythat
software jobs (or knowledge worker jobs) are typically
highpayingjobs.Thiscreatesaverystrongincentivefor
businessestooffshoreand,whenpossible,automatethese
jobs.Anotherpointwecanmakeisthatthereisreallyno
relationshipbetweenhowmuchtrainingisrequiredfora
humanbeing,andhowdifficultitistoautomatethejob.
Tobecomealawyeroraradiologistrequiresbothcollege
and graduate degrees,butthiswill nothold off automa-

tion. It isa relatively simple matter to program accumu-
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latedknowledgeintoanalgorithmorenteritintoadata-
base.
Forknowledgeworkers,thereisreallyadoubledose
ofbadnews.Notonlyaretheirjobspotentiallyeasierto
automate thanother job typesbecause no investment in
mechanical equipment is required; but also, the financial
incentiveforgettingridofthe jobissignificantlyhigher.
Asaresult,wecanexpectthat,inthefuture,automation
willfallheavilyonknowledgeworkersandinparticularon
highlypaidworkers.Incaseswheretechnologyisnotyet
sufficient to automate the job, offshoring is likely to be
pursuedasainterimsolution.
Given this reality, it may be that the simulation we
performedinChapter1wasactuallysomewhatconserva-
tive.Lookbackatthetablelistingtraditionaljobsonpage
59. Veryfew of thesepeopleare knowledgeworkers. In
our simulation, we assumed that automation would fall
evenlyonsomesignificantpercentageoftheaveragelights
inthetunnel.Wenowsee,however,thatautomationmay,
in fact, arrive in a relatively “top heavy” pattern.It may
wellbethatagreatmanyofthebrighterlightsinourtun-
nelwillbeamongthefirstimpacted.
Whatdoesthismeanforabusinessthatoffersprod-
ucts and services in the mass market? Clearly, it implies
thatautomationmaybepoisedtosomedayeliminatenot
justuntoldmillionsofyourpotentialcustomers—itislike-

lytohithardatyourbestcustomers.
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Automation, Offshoring and Small Business
Wetendtothinkofautomationandoffshoringasprimari-
lyimpactingjobsinlargecorporations.Afterall,ittakesa
substantial investment to set up a relationship with an
overseasoutsourcingfirmorbringinspecializedautoma-
tionequipmentorsoftware.In thenearfuture,however,
bothofthesepracticesarelikelytobecomeincreasingac-
cessibleandinexpensiveforeventhesmallestbusinesses.
Thereisasignificanttrendtowardbreakingjobsinto
smallerpiecesorspecifictasks—whichcanthenbeeither
automatedoroffshored.Thiscapabilityisincreasinglybe-
ing offered to small businesses either as pre-packaged
softwareorthrougheasytouseonlineinterfacesoverthe
Internet.Taxpreparationisoneareawherethisapproach
is already widespread. Instead of making a large invest-
ment in sophisticated automation software, a small busi-
nessownerormanagerwillbeabletovisitawebsiteand
then rent access tothe softwareon either a per-houror
per-taskbasis.Ithinkitisverypossiblethatthesamewill
happen with task-specific offshoring. Competition be-
tweenserviceproviderswillquicklyproducelowerprices,
easiertouseonlineinterfaces,andawidervarietyofser-
vices.
Theresultwillberapidpenetrationofthesepractices
intobusinessesofallsizes.Aswesawwiththeradiologist
and the lawyer, once significant portions of jobs can be

automated, the number of workers employed will imme-
diatelybegintofall.TheU.S.SmallBusinessAdministra-
tion estimates that businesses with fewer than 500 em-
ployees have generated from 60-80 percent of all job
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growth over the past decade.
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 As it becomes easierand
cheaper for business owners to employ automation and
offshoring,wemaywellfindthatthesepracticeswillbe-
comeasignificantdragonAmerica’sprimaryjobcreation
engine.
“Hardware” Jobs and Robotics
A“hardware”jobisajobthatrequiressomeinvestmentin
mechanicalorrobotictechnologiesinorderforthejobto
be automated. The automation of hardware jobs started
long before the computer revolution. Machines used on
assemblylines, farm equipment, and heavyearthmoving
equipmentarealltechnologiesthathavedisplacedmillions
of workers in the past. As history has shown, repetitive
motion manufacturing jobs are among the easiest to au-
tomate. In fact, as I mentioned, this is how the Luddite
movementgotstartedbackin1811.However,themerger
of mechanics and computer technology into the field of
robotics will almost certainly impact an unprecedented
number and types of jobs. Whether a specific hardware
job isdifficultoreasytoautomate reallydepends onthe
combinationofskillsandmanualdexterityrequired.

Foranexampleofajobthatisverydifficulttoauto-
mate, let’s consider an auto mechanic. A mechanic ob-
viouslyrequiresagreatdealofhand-eyecoordination.He
or she has to work on thousands of different parts in a
varietyofdifferentengines,ofteninhighlyvariedstatesof
repair.Inotherwords,arobotmechanicwouldfacemany
visual recognition and manipulation problems similar to
theoneswediscussedearlierwiththerobothousekeeper.
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In addition, the robot mechanic would require a much
higherdegreeofproblemsolvingskillthanthehousekee-
per. In fact, this diagnostic skill it not something that
couldbesolvedwithsoftwarealonebecauseitextendsto
nearlyallthehumansenses.Amechanicmaylistentothe
soundanenginemakesorevendiagnoseaproblembased
onaspecificsmell.
As things stand, we can say that becoming an auto
mechanicisprobablyaprettysafechoiceforthetimebe-
ing. But, as wesaid with the housekeeper,that doesnot
imply the job will be safe forever. Advances in robotic
technology will continue relentlessly until many of these
problems are solved. However, an even more important
factorislikelytobechangesmadetothecarsthemechan-
ic is working on. Advancing technology has already im-
pactedthewaymechanicswork;computerizeddiagnostic
toolsarenowusedtoreadfaultcodesprovidedbymicro-
processors embedded in the engine. We can expect that
thistrendwillcontinue,andthat,atsomepointinthefu-

ture,carsmaywellbedesignedspecificallytobeworked
onbyroboticmechanics.
Atruckdriverisanotherexampleofajobthatislike-
lytobeprotectedforthetimebeing,but,inthelongrun,
the reason will probably not be so much technology as
socialacceptance.Themilitaryisalreadymakingsubstan-
tialinvestmentsinautomatedtrucksthatcouldbeusedon
thebattlefield.Thesecouldbecompletelyautonomous,or
theymightbeprogrammedtosimplyfollowaleadtruck.
Similarly,manycarmanufacturerswillsoonbedeploying
collisionavoidancetechnologyincars.Thesesystemswill
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help drivers avoid mistakes that might lead to accidents;
howeverovertimetheycouldevolveintotechnologyca-
pableofdrivingthecarautonomously—justasjetairliners
nowroutinelyflyandlandwithoutassistance.
While the technology forautomated carsand trucks
may arrive, it is somewhat difficult to imagine thatmost
peoplewouldbeeagertosharetheroadwith50-tondri-
verless trucks. A second important issue would likely be
thepoweroftheTeamstersunion.Onceagain,however,I
have to givemystandard disclaimer: this doesnot mean
truckdrivingjobswillalwaysbeprotected.
The job types that are likely to be threatened fairly
soon byadvancesinroboticsare the jobs thatfit some-
wherebetweentheautomechanicandtherepetitivemo-
tion assembly line worker. As an example, consider the
shelfstockerina supermarket or chain retailstore. This

jobrequiresmoreflexibilitythanworkingonanassembly
line,butstillfallsfarshortofwhattheautomechanicfac-
es.
Thelayoutofasupermarketisstandardizedandcould
easilybeprogrammedintoacomputer.Theaislesarewide
andthefloorsaresmooth;idealterritoryforanindustrial
robot.Everyitemhasaspecificplaceontheshelves.Bar
codesmakeitasimplemattertoidentifyitems,andspecial
location markers could be placed on the shelves: a shelf
stocking robot faces few of the visual recognition issues
that challenged our housekeeping or auto mechanic ro-
bots.Designinga robot that couldmoveinventoryfrom
the stock room and place it on shelves is certainly well
withintherealmofpossibilityinthenottoodistantfuture.
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Needless to say, if a robot can be designed to stock
shelves, then it can also be made to unload trucks and
movematerialofalltypes.
Skepticalthatrobotsmightsomedaybesteppinginto
thesejobs?Considerthatasfarbackas2005,CNETNews
Blogpublishedanarticleentitled“WhysoNervousabout
robots, Wal-Mart?”
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Thearticlepointedout thatreports
hadsurfacedaboutWal-Marttestinginventory-takingro-
bots.Thesewouldberobotsprogrammedtonavigatethe
aislesatnightandautomaticallytakeacompletestorein-
ventory. When the CNET reporter contacted Wal-Mart

management, he received anunusually abrupt denialthat
Wal-Martwasconsideringusingrobotsinanyway.
WecantakeWal-Mart’smanagementatitswordand
assumethatit,infact,hasnoplanstouserobots.Inthe
long run, however, that won’t matter. At some point, if
oneofWal-Mart’scompetitorstriestogainanadvantage
by employing robots, then Wal-Mart and every other
competingbusinesswillreallyhavenochoicebuttofol-
lowsuit.ThepointofthisisnottovilifyWal-Martorany
otherbusinessthatmightsomedaychoosetoemployau-
tomation.Wehavetoacknowledgethat,inafreemarket
economy,everybusinesshastorespondtoitscompetitive
environment and employ the best available technologies
andprocesses.Ifitdoesnotdoso,itwillnotsurvive.
Historyhasshownthatjobautomationveryoftenin-
volves pushing a significant portion of the job onto the
customer.Automationinthecustomerserviceareaisreal-
lyself-service.ThishasbeenthecasewithATMs,automated
checkoutaislesandevenself-servegaspumps.In there-
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cently opened Future Store
27
 near Düsseldorf, Germany,
in-storeretailsalesandcustomerassistanceisbeingauto-
matedviaacell-phoneinterface.Shoppersareabletoget
realtimeassistance,whileshopping,throughtheirmobile
phones.Theycanalsoscanbarcodesastheyshopand,in
thenearfuture,willbeabletopayfortheirpurchasesdi-

rectly through their phones—presumably avoiding the
checkoutislealtogether.
Thespecterofnearfullyautomatedsupermarketsand
chainretailstoresiscauseforgenuineconcern.Theseare
nowthejobsoflastresort.Thesearethejobsthatworkers
displacedfromotherindustriestakebecausethereisnoth-
ingbetteravailable.Lookbackatthetableonpage59.We
havealreadymentionedthat3.5millioncashiersarepoten-
tiallyatrisk.Thetableshowsanother4millionretailsales-
personsand2.3millionlaborersandfreight,stockandma-
terialmovers,aswellas1.7millionstockclerksandorder
fillers.Whatnewjobscouldwepossiblyfindforallthese
people?
Readanyarticleinthepopularpressaboutthefieldof
roboticsanditspotentialfutureimplications,andyouwill
almostinvariablyfindasentencepointingoutthat“inthe
future, robots will be used to perform tasks which are
dangerous for people, or jobs which people don’t really
want.” That is surely true, but it implies the somewhat
wistful assumptionthatrobots won’t beused injobs that
peopledowant.Thatisobviouslyasillyassumption.Ro-
bots,andotherformsofautomation,willbeusedinstead
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ofpeopleassoonitbecomescosteffectiveandprofitable
forbusinessestodoso.
*

“Interface” Jobs

AthirdtypeofjobiswhatIcallan“interface”job.The
people who hold these jobs, toalarge extent, fill inthe
crackswhichcurrentlyexist betweenvariousinformation
formats and technologies. As an example, consider what
happenswhenyouapplyforahomemortgageloan.Ifyou
workwithanindependentmortgageagent,heorshewill
probablygiveyouapaperapplicationtofillout.Next,you
willneedtoretrieveandmakecopiesofyoursupporting
documentation: pay stubs, tax returns, bank statements,
insurancedocuments,etc.
Allofthis documentationwillbeonpaperoritwill
befaxedtoyou.Apropertyappraisalwillbedone,andthe
reportwillbeforwardedtotheloanagent.Oncetheloan
agentcollectseverythingtogether,heorshewillprobably
faxit all to thebank, wherealoanofficer will review it.
Ultimately,numberssuchasyoursalary,creditrating,and
the equity to loan ratio will be plugged into a computer
programandtheloanwilleitherbeapprovedordenied.
Clearly, the bulk of the labor associated with this
process is in collecting, copying, collating and faxing in-
formation.Theintellectualportionofthejob—eitherap-
provingordenyingtheloan—isprobablyalreadyessential-
lyhandledbyacomputer.Throughouttheeconomy,there


*
Formoreonroboticsanditspotentialimpactonemploymentand
on society, see Marshall Brain’s “Robotic Nation” blog at
.
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areprobablythousandsofjobsforclerksandofficework-
ersthatcontinuetoexistbecauseofthisclunkyinterface
betweenwhatexistsonpaperandwhatneedstobeina
computer.
Clearly,wecannotexpectthatthisstateofaffairswill
continueforever.Financialstatementsarealreadyavailable
online. Standard data formats are making it increasingly
easy for computers to talk directly to one another. The
“XML” standard is a very popular format that is already
widely used to move data between different businesses
overtheInternet.UsingXML,thecomputersatamanu-
facturingcompanycantalkdirectlytothecomputersbe-
longingtothecompany’ssuppliers.Thecontinuingdrive
towardpaperlessdocumentsandseamlesscommunication
islikelytoeliminatemanyofthesehumaninterfacejobsin
thecomingyears.
The Next “Killer App”
Since the beginnings of the personal computer industry,
computerhardwaresaleshaveoftenbeendrivenbyapar-
ticularsoftwareapplicationsocompellingthatithasmoti-
vatedcustomerstopurchasethemachinerequiredtorun
it.WhentheAppleIIwasintroducedin1977,it wasin-
itiallyasuccesswithinarelativelysmallgroupofcomputer
hobbyists. It wasn’t until the first electronic spreadsheet,
VisiCalc,wasdevelopedthattheAppleIIbegantogener-
ate wider interest. VisiCalc was the catalyst that helped
transformtheAppleIIfromaninterestingtoyintoatrue
businessmachine.Likewise,whentheIBMPCwasintro-

duced,Lotus1-2-3fulfilledthe“killerapp”role.Later,it
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was graphic designand desktop publishing software that
drovetheAppleMacIntoshtosuccess.
Inrecentyears,thehighestsalesgrowthforthecom-
puterindustryhasnotbeeninhigh-enddesktopcomput-
ers butinstead in laptops and, lately, thenewernetbook
machines that provide a simple and inexpensive way to
browsetheweb.Atleastinpart,thisprobablyresultsfrom
thefactthattheaccelerationofcomputerhardwarecapa-
bilityhaslargelyoutpacedwhatisrequiredtorunmostof
thesoftwareapplicationsofinteresttotheaverageuser.If
you are primarily interested in word processing, spread-
sheetsandwebbrowsing,itmaybedifficulttojustifythe
costofa high-endcomputerwhen alowercostormore
portablemachineoffers morethanenoughpower torun
thesoftware.Likewise,itseemstobeincreasinglydifficult
for Microsoft and other software vendors to continually
addnewfeaturestodesktopproductivityapplicationsand
operating systems that are compelling enough to justify
expensiveupgrades.
YetthebusinessmodelsofbothIntelandMicrosoft
dependoncontinuingtosellevermorepowerfulproces-
sorsandneworupdatedsoftwareapplicationstotakead-
vantageofthatpower.Ifcustomersweretopermanently
turnawayfromtheideaoffasterprocessors,thebusiness
would quickly become commoditized, and Intel would
loseitscompetitiveadvantage.Forthatreason,wecanbe

surethatIntel,Microsoftandhundredsofothersoftware
companies are actively seeking the next killer app—
something that will fully leverage the vastly increased
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computerpowerthatwillbeavailableinthecomingyears
anddecades.
Ithinkthattherearegoodreasonstobelievethatthis
nextkillerapp isgoing toturnout to beartificial intelli-
gence (AI). AI applications are highlycompute intensive
andwilltakefulladvantageofallthecomputationalpower
thatnewprocessorscanoffer.NewstandaloneAIapplica-
tions will appear, but more importantly, artificial intelli-
genceislikelytobebuiltdirectlyintoexistingproductivity
applications and operating systems, as well as the enter-
prise software and database systems used by large busi-
nesses.
The market for AI software is likely to extend far
beyond the computer industry. Increasingly sophisticated
robots will demand the most advanced hardware and
software available. High-end microprocessors and AI
softwarewillalsosurelybeusedtobuildintelligenceinto
appliances,consumerdevicesandindustrialequipmentof
allkinds. Ultimately,robotsand other non-computer ap-
plicationsmaywelleclipsethepersonalcomputermarket
as the primary growth engine for leading-edge hardware
andsoftware.
Productsthatgivesomeinsightintowhatthefuture
mayholdarealreadyondisplay.Microsoftrecentlydem-

onstrateda“virtualpersonalassistant”whichappearsasa
computergeneratedpersononthescreen.Theassistantis
capable of tasks such as making airline reservations or
scheduling meetings and requires the most advanced
hardwareavailable.AccordingtotheNewYorkTimes,Mi-
crosoft’s virtual assistant can “make sophisticated deci-
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sionsaboutthepeopleinfrontofher,judgingthingslike
theirattire,whethertheyseemimpatient,theirimportance
and theirpreferred timesfor appointments.”
28
 The Times
article also quotes a Microsoft executive who speculates
thatfutureapplicationsmightincludea“medicaldoctorin
abox”thatcouldhelpwithbasicmedicalissues.
An artificial intelligence application that could dis-
pensebasic medicaladviceiscertainlya compellingidea,
especiallyin light ofthecontinuingproblemwithaccele-
rating health care costs. However, it raises an important
point.Whateducationandtrainingwouldwerequireofa
personwhodispensedsuchinformation?Wouldthisperson
needto beadoctor? Perhapsnot,butclearlythiswould
notbeoneofthelowskill, lowwagejobsthatwe often
associate with vulnerability to automation. The reality is
that there is simply little or no relationship between the
levelofeducationandtrainingrequiredforapersontodo
ajobandwhetherornotthatjobcanbeautomated.While
doctorsareprobablynotindangeroflosingtheirjobsin

theforeseeablefuture,thesamecannotbesaidformany
thousandsofknowledgeworkersandmiddlemanagersin
theprivatesector.
It’simportanttonotethat,whilehumanoidinterfaces
likeMicrosoft’svirtualassistantmakeforgreatdemonstra-
tions, the AI applications that will likely displace know-
ledgeworkerswillnotneedsuchelaborateinterfaces.They
willsimplybeworkhorseprogramsthatmaketheroutine
decisionsandperformthetasksandanalysisthatarecur-
rently the responsibility of highly paid workers sitting in
cubiclesallovertheworld.AIcapabilitymaystartoutby
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being built into the productivity applications used by
workers, but over time, it will evolve to the point that
these applications can perform much of the work auto-
nomously:AIwillbecomeatoolformanagersratherthan
workers.Theresultislikelytobesubstantialjoblossesfor
knowledge workers and a flattening of organizational
chartsthatwilleliminatelargenumbersofmiddlemanag-
ers.(Theimpactofautomationwill,ofcourse,beinaddi-
tiontothat ofoffshoring.)Manyofthesepeoplewillbe
highlyeducatedprofessionalswhohadpreviouslyassumed
thattheywere,becauseoftheirskillsandadvancededuca-
tions, beneficiaries of the trend toward an increasingly
technologicalandglobalizedworld.
*

Military Robotics

Oneofthebiggestinvestorsinroboticstechnologyisthe
Pentagon. In his recent book Wired for War: The Robotics
RevolutionandConflictinthe21stCentury,P.W.Singerpoints
out thatthe U.S. militaryexpectsrobotic technologiesto
playanincreasinglyimportantroleinconflictsof thefu-
ture.Remote-controlleddroneaircraftandbomb-defusing
groundrobotsarealreadymakingcrucialcontributionsto
thewareffortinIraqandAfghanistan.TheDefenseAd-
vanced Research Projects Agency (DARPA)—the birth-
placeoftheoriginalcomputernetworkthatledtotheIn-
ternet—now considers military robotics to be one of its
top research priorities.
29
 In the coming decades, we can
anticipatefarmoreadvancedrobotsplayinganincreasing-


*
Pleasesee“MachineIntelligenceandtheTuringTest”intheAppen-
dixformoreonartificialintelligence.
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ly autonomous role in warfare in the air, on the ground
andatsea.
Allofthismakesforaratherharshcontrastbetween
theforesightshownbythemilitaryascomparedwithcivi-
lianeconomistsandanalysts.Considertheuneventerrain
and the highly unpredictableand dynamic situationsthat
would be faced bybattlefield robots. Nowcompare that

withtheenvironmentinsideasupermarketorwarehouse.
Itseemsobviousthatdesigningrobotstoperformmuch
oftheroutineworkrequiredwithincommercialandindus-
trialjobsettingsisfarlesschallengingthanproducingau-
tonomousmilitaryrobots. TheU.S.military isrightlyin-
vestingsubstantialresourcesinstudyingthefutureimpact
ofroboticsandartificialintelligenceonthewayinwhich
future warswillbefought.Andyet,littleor no cohesive
thoughtorplanningisbeinggiventothedisruptiveimpact
thatthesetechnologieswillcertainlyhaveinthecommer-
cialsectorandontheoveralleconomy.
Robotics and Offshoring
Aswe’veshown,“software”jobsarehighlysubjecttooff-
shoringandpotentiallyalsotoautomation.Those“Hard-
ware” jobs thatrequire significant hand-eye coordination
inavariedenvironmentarecurrentlyverydifficulttofully
automate.Butwhataboutoffshoring?Canahardwarejob
beoffshored?
Infactitcan,andwearelikelytoseethisincreasingly
inthenearfuture.Asanexample,consideramanufactur-
ingassemblyline. Supposethat the highlyrepetitivejobs
have already been automated, but there remain jobs for
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skilled operators at certain key points in the production
process. How could management get rid of theseskilled
workers?
Theycouldsimplybuildaremotecontrolledrobotto
performthetask,andthenoffshorethecontrolfunction.

As we have pointed out, it is the ability to recognize a
complex visual image and then manipulate a robot arm
basedonthatimagethatisaprimarychallengepreventing
full robotic automation. Transmitting a real-time visual
imageoverseas, wherea lowpaidworkercanthenmani-
pulatethemachinery,iscertainlyalreadyfeasible.Remote
controlledrobotsarecurrentlyusedinmilitaryandpolice
applicationsthatwouldbedangerousforhumans.Wevery
likely will see suchrobotsinfactoriesand workplacesin
thenearfuture.
Nanotechnology and its Impact on Employment
One of the most exciting and high impact technological
advancesthatwecanlookforwardtointhecomingdec-
ades is in the emerging field of nanotechnology. Nanotech-
nologyisconcernedwiththemanipulationofmatteratthe
molecularoreventheatomiclevel.Inthefuture,wemay
be ableto build molecular machines:tiny inventions,far
smallerthantheheadofapin,thatcanessentiallytrans-
formmatterandcreatenearlyanythingwewantoutofthe
mostbasicingredients.
This may seem like pure fantasy until we learn that
nanotechnology is already here and has been operating
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sincelongbeforehumanbeingswalkedtheearth.
*
Itisall
aroundusandeveninsideus.Alllivingthings,atthemost
basic level, operate under the directionof molecular ma-

chines.Weknowthatourgeneticrecipeisencodedinthe
doublehelix-shapedDNAmoleculesinthenucleusofour
cells.Buthowdoesthatrecipeget translatedinto anin-
comprehensiblycomplexorganismlikeahumanbeing?
Ifwecouldzoominandwatchtheactioninsideour
cells,we wouldseetinymolecularmachines “unzip”our
DNAmoleculesandreadportionsofourgeneticcodeina
waythatisnotunlikeacomputerscanninginabarcode.
That genetic “bar code” is then transmitted to another
areainourcells.Inatinybiologicalfactorycalledtheribo-
some,therecipecapturedinthebarcodeisagainreadby
other nano-machines that build protein molecules. It is
theseproteinmoleculesthatarethetruebuildingblocksof
life.Ourmuscletissue,thehemoglobininourred blood
cells, the insulin that we need to process sugar, the en-
zymes that digest our food—all of these and countless
thousandsofotherstructuresandchemicalsthatcomprise
ourbodies and make usfunctionareproteins.And they
areallconstructedthroughnanotechnology.
Itislikelythatthecoming“nanotech”revolutionwill
begin with the study of these existing, living machines.
Imagineateamofscientistsdescendingonanalienspace-


*
Iamreferringheretotrulyadvancednanotechnologyor“molecular
machines.”Anumberoftechniquesandprocesseswhicharecurrently
inusearereferredtoas“nanotechnology,”butthesereallyrepresent
theleadingedgeoftraditionalmaterialsscience.Itislikelytobedec-
adesbeforeadvanced nanotechnology is putto widespread,practical

use.
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craftfoundburiedintheNewMexicodesert.Theywould
beginbystudyingthisalientechnologyandattemptingto
reverse-engineer it. In time, they might begin to tinker
withthespacecraftandmakeitoperateinnewanddiffer-
entways.Eventually,theywouldunderstandthetechnolo-
gyatafundamentallevel,andtheywouldbeginusingitto
buildnewmachinesoftheirown.Thiswillquiteprobably
bethepathalongwhichnanotechnologywillevolve.
30

Nanotechnology is currentlyin itsinfancy, and itis
likelythatitwilltakedecadesbeforetrulyadvancedappli-
cations become available. Nonetheless, the field offers
enormous promise and may somedaytouch nearly every
aspectofourlives.Amazingnewtreatmentsandcuresin
thefieldofmedicine,thepossibilityofgeneratingvirtually
limitless energy from the sun, even faster and more po-
werfulcomputers,unimaginablenewpossibilitiesinmanu-
facturing—allthesethingsandmoremaycomefromna-
notechnology.
But as we contemplate these exciting possibilities,
there is another question we need to ask: willnanotech-
nologycreatejobs?Willourdisplacedcashiersandshelf-
stockers and officeclerks find employment in thenano-
technology industry? A simple application of common
senseshouldgiveustheanswer.Wespeakhereofmani-

pulatingmatteratthemolecularlevel.Thelevelofpreci-
sion requiredisobviouslybeyondanyhumanbeing, and
nanotechnologywillhavetobefullyautomated.Certainly
theremaybejobsforafewveryhighlytrainedtechnicians,
buttheideathatjobswillbecreatedforbluecollarwork-
ers is fantasy. If infact,at some pointinthe future, the
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bulk of our traditionalmanufacturing evolves into nano-
manufacturing, the global impact on employment would
benearlybeyondmeasure.
The Future of College Education
Nearlyeveryoneagreesthatacollegedegreeisgenerallya
tickettoabrighterfuture.IntheUnitedStatesin2006,the
averageworkerwithabachelor’sdegreeearned$56,788,
31

whiletheaveragehighschoolgraduateearnedalittlemore
thanhalfthisamount,or$31,071.Workerswithgraduate
orprofessionaldegreesearnedastillhigheraveragesalary
of$82,320.Whiletheprimarymotiveforthemajorityof
individualstopursueadvancededucationisalmostcertain-
lyeconomic,wewouldallagree thateducationalsocon-
veysmanyotherbenefitsbothtotheindividualandtoso-
ciety as a whole. A person with more education seems
likelytoenjoyagenerallyricherexistence,tohaveanin-
terest in a greater variety of issues and is perhaps also
morelikelytobefocusedoncontinuingpersonalandpro-
fessional growth. A more educated society is generally a

more civil society with a lower crime rate. An educated
personislikelytohangoutinthelibrary—ratherthanon
streetcorners.
The unfortunate reality, however, is that the college
dreamislikelyatsomepointtocollidewiththetrendsin
offshoringandautomationthatwehavebeendiscussingin
this chapter.Thefactisthatcollegegraduatesveryoften
end up taking “software” jobs; they become knowledge
workers. As we have seen, these jobs—and in particular
more routine or entry level jobs—are at very high risk.
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Thedangeristhatasthesetrendsaccelerate,acollegede-
greewillbeseenincreasinglynotasatickettoaprosper-
ousfuture,butasatickettoajobthatwillverylikelyva-
porize.Atsomepointinthefuture,thehighcostofacol-
lege education, together with diminishing prospects for
collegegraduates,islikelytobegin havinganegativeim-
pactoncollegeenrollment.Thiswillbeespeciallytrueof
students coming from more modest backgrounds, but it
willhaveimpactatalllevelsofsociety.
Thisis,obviously,averyunconventionalview.Most
economists and others who study such trends would
probablystronglyargueexactlytheoppositecase:thatin
the future, a college degree will be increasingly valuable
andtherewillbestrongdemandforwell-educatedwork-
ers.
Thisisessentiallythe“skillpremium”argument—the
idea that technology is creating jobs for highly skilled

workersevenasitdestroysopportunitiesfortheunskilled.
I think the evidence clearly shows that this has indeed
been the case over the past coupleof decades, but I do
notthinkitcancontinueindefinitely.Thereasonissimple:
machines and computers are advancing in capability and
willincreasinglyinvadethe realm ofthehighlyeducated.
We’lllikelyseeevidenceofthisatsomepointintheform
ofdiminished opportunityandunemploymentamongre-
cent graduates and also among older college-educated
workerswholosejobsandareunabletofindcomparable
positions.
Wemaynotseeanactualclosingofthegapinaver-
agepay for college v. non-college graduates becauseop-
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portunitiesforworkersofallskilllevelsarelikelytobein
decline. I am not suggesting that high school graduates
who wouldhaveotherwise gone to college will choseto
remaincompletelyunskilled,butIdothinkthereislikely
tobeamigrationtowardrelativelyskilledbluecollarjobs
ifthereisaperceptionthattheseoccupationsoffermore
security.
Asnewhighschoolgraduatesbegintoshyawayfrom
a course leading to knowledgeworkerjobs, they willin-
creasingly turn to the trades. As we have seen, jobs for
peoplelikeautomechanics,truckdrivers,plumbersandso
forthareamongthemostdifficulttoautomate.Theresult
maywellbeintensecompetitionfortheserelatively“safe”
jobs.Ashighschoolgraduateswhomightpreviouslyhave

been college-bound compete instead for trade jobs, they
will,ofcourse,endupdisplacinglessacademicallyinclined
peoplewhomayhavebeenabetterfitforthosejobs.That
willleaveevenfeweroptionsforalargenumberofwork-
ers.
We see evidence of this trend already in the daily
news.Newspapersroutinelyreportthatpeoplearespecifi-
callyseekingjobsthatcan’tbeoffshored.Muchismadeof
new“greencollarjobsthatcannotbeoutsourced.”While
this is certainly a desirable development, we have to ac-
knowledgethatthebulkofthesejobsaregoingtoinvolve
installing solar panels, wind turbines and so forth. They
aretradejobs;notjobsforcollegegraduates.
Thecosttosocietyofsuchaturnawayfromeduca-
tion would be enormous. It would damage the hopes,
dreams and expectations of our children and potentially
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rob them of things thatwe ourselves havecome to take
for granted. Those workers whose prospects were dimi-
nishedbyanewinfluxofmore“booksmart”competitors
would become even more dispirited and more likely to
turntocrimeorotherundesirablealternatives.Thisharsh
newrealitywouldfallmostheavilyonpeopleindisadvan-
tagedsectorsofthepopulation.Finally,andperhapsmost
chillingly,atrendawayfromcollegewouldrobusoftalent
wemaywellneedinthefuture.
Econometrics: Looking Backward
The majorityofmainstreameconomists, uponwhom we

dependtodetectand project trendssuchastheoneswe
have discussed here,donot seem to beparticularlycon-
cernedaboutapotentialtransitiontoanautomatedecon-
omy. Theyhold firm to the beliefthatthe economy will
continuously generate jobs within the capabilities of the
averageworker—andthatthisprocesswillcontinueinde-
finitely. I think the reason that economists cannot see
what isreallyhappeningmaybethat theyare simplytoo
buriedintheirdata.
Inrecentdecades,thefieldofeconomicshasbeenin-
creasinglytakenoverbythebranchofthefieldknownas
econometrics. Econometrics is essentially a merger of eco-
nomicsandstatistics.Econometriciansengageinthetask
ofanalyzingreamsofpasteconomicdata.Theyapplyad-
vancedstatisticaltechniquesandcreatecomplexcomputer
models.Infact,itwouldbefairtosaythateconometricsis
anotherexampleofchangethathascomeaboutasaresult
of ourvast increaseincomputationalcapability.Without
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computers,therewouldcertainlybefarfewereconometri-
cians.
Unfortunately, the purveyors of econometrics labor
underthedelusionthattheyareeconomists,wheninfact
they are historians. Statistics is well suited to measuring
thingswhicharerelativelyconstantorwhicharechanging
gradually. It works great for baseball and for projecting
demographictrends. It doesnot, however, do well in an
environment that is that is likely to be increasingly im-

pacted bya geometric or exponential change. The graph
thatfollowsshouldhelpillustratethispoint.

Econometrics: Looking Backward










Thereasoningoftheeconometricianisillustratedby
thestraight,gradually increasing line. He orshe assumes
thatitispossibletocrunchdatafromtwo,fiveoreventen
yearsagoanddiscerntrendsthatwilllikelyholdtrueinthe
future.Theproblemiscompoundedbythefactthataba-
sic tenet of statistics is the idea that more data gives a
more reliable result. For our econometrician, more data
Projections based on past data
Technology
Time
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often meansgoing evenfurtherback into the past. So a
studybasedontenyearsworthofdatamightwellbecon-
sideredbetterthanonelookingatonlythelasttwoyears.

Theproblemwithallthisisshownbytheotherline
onthischart.This,ofcourse,isthegeometricallyincreas-
inglinethatrepresentstechnologicaladvance.Obviously,
technologyisgoingtohaveahighlydisruptiveimpacton
the assumptions of the econometricians. Why have they
not seenit?Because ageometricadvance startsout very
graduallyandthen,verysuddenly,beginstoincreasedra-
matically. In fact, by the time econometrics shows clear
evidence ofwhat is happening, itwillbe verylateinthe
game. Economistslooking at past data are alwayslooking
back at the flat (left) part of the geometrically increasing
technologyline. Prior to thepoint where the impact be-
comesobvious,thereisreallynowaypastdatacanshow
themthesteepverticalpartofthelinethatliesahead.
The Luddite Fallacy
As mentioned previously, economists have invented a
concept,namedinhonorofthe1811Ludditemovement,
called the Luddite fallacy. This line of reasoning saysthat,
while technological progress will cause some workers to
losetheir jobsas a result ofoutdated skills, any concern
thatadvancingtechnologywillleadtowidespread,increas-
ing unemployment is, in fact, a fallacy. In other words,
machineautomationwillneverleadtoeconomy-wide,sys-
temic unemployment. The reasoning offered by econo-
mists is that, asautomationincreases the productivity of
workers,itleadstolowerpricesforproductsandservices,
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andinturn,thoselowerpricesresultinincreasedconsum-

er demand. As businesses strive to meet that increased
demand,theyramp upproduction—andthat meansnew
jobs.
Faith in the reasoning behind the Luddite fallacy is
deeplyingrainedinmostprofessionalandacademicecon-
omists.WilliamEasterlyisaprofessoratNewYorkUni-
versity and an expert in the economies of developing
countries. In his book TheElusiveQuest for Growth: Econo-
mists’ Adventures and Misadventures in the Tropics,
*
 Easterly
verywellexpressestheconventionalviewthatwesetout
to challenge when we created our tunnel simulation in
Chapter1.Hismainpointisthat,asadvancingtechnology
increases productivity, prices will fall, demand will in-
crease, and the economy will therefore produce more
goodsandservices.Inotherwords,thesamenumberof
workerswillbeemployedbuttheywillproducemore.
32

The question we have to ask is: where will this in-
crease in demand come from? Who is going to step for-


*
ThisisinnowayintendedtodisparageEasterly’sbook—whichgives
manyveryusefulinsightsintotheeconomicissuesrelatedtopoverty
inthirdworldcountries.Easterly’sbookiscitedherebecauseitoffers
averycohesiveexplanationofthereasoningacceptedbythemajority
ofeconomists.Weshouldalsonotethatthebookprimarilydealswith

developingnationsinthetropics.Thesecountriesarestartingfroma
low technological level and may wellhaveexport-driveneconomies,
andsoitisnotunreasonabletoassumethattheireconomicdevelop-
ment would follow the historical trend seen in advanced countries.
However, if we extend this idea to include the future broad-based
integration of advanced technologies such as robotics and artificial
intelligenceintotheentireworldeconomy,itfallsapart.Thesetech-
nologiesaregamechangers:atsomepointinthefuture,theyaregoing
tofundamentallyaltertherelationshipbetweenworkersandmachines.