Thursday, November 11, 2010

Education for an automated future

I just got back from a short trip to Toronto, ON, Canada.  I used my iPad with my kindle reader to read some books on the way there and back.  It’s amazing that I can have 1/2 dozen books on a thin electronic slate, highlight and add notes, and later sync it up to “the cloud” for use later.  E-readers are disruptive technologies…

While sitting in a cab cruising through the city, I wondered about the economy.  Actually, I think a lot about our economy these days.  I am overwhelmed with the complexity and magic that defines the economy.  Small shops on obscure streets, massive 50 story business towers, huge hotels, hospitals, government buildings, university facilities, restaurants, people walking everywhere, grid locked traffic with people coming and going, and so on.  At the airport, there are untold numbers of people going to and coming from hundreds or thousands of locations.  Some for pleasure and some for business.  Just one day in Toronto probably represents billions of dollars of monetary activity.  People are involved in creating, producing, serving, educating, learning, eating, purchasing, managing, etc. involving massive amounts of money every day.  But at a fundamental level, how does this actually work?

Disclaimer: I am not an economist and my musings in this post are just musings.  Simply put, our free market economy is based on a capitalistic system: there are producers and there are consumers.  Interestingly though, most consumers are involved in some aspect of production as workers.  A capitalistic system generally involves producers investing capital in improvements to production processes to become more efficient or to produce new products or higher volumes, and to lower the cost of production.  With technology, this often results in some loss of certain types of jobs.  But, new jobs are usually created somewhere in the system to absorb displaced workers and to accommodate new entries.  Workers are paid a wage and they consume the goods and services produced.  Wages are distributed in an unequal way – this is due to how we value certain work or the level of education required to do the work or how complex the work is, etc.  As long as there is continuous growth in the size of the economy, the system seems to work.  It has created tremendous wealth for those involved in this economy.  But, it hasn’t benefited all… there are sadly approximately 2 billion people in the world that earn and live off of the equivalent of $2.00 or less per day.

But, what if the system runs out of steam?  What if we enter a new era where more jobs are permanently lost that are created?  What might cause this potential future?  And what should we do about it if we believe it to be possible or likely?  I suspect most people don’t like to think about questions like this.  I know I don’t but I think we have to.

I’ve read a few books that talk about the impact of technology on work and our economic well being.  Historically, we all know that the impact has been overall very positive.  Many people have become obscenely wealthy but more importantly more people than at any time in history now enjoy a very good lifestyle.  Technology has fueled a remarkable wealth generating machine.  The books I’ve read that really speak to this topic include:

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If you choose to read these be prepared to have your world view about the economy, jolted.  These are not feel good stories but I think the topic is very important for our society to be addressing now.  Ford says

“if we can foresee that technology is likely to have a highly disruptive impact on our economy in the coming years and decades, then we really need to start thinking about that well in advance”, Kindle location 208

The primary factor driving us to automation is that technology is doubling in power / capability approximately every 18-24 months – referred to as Moore’s Law named after Intel co-founder Gordon E. Moore.  It is an exponential change.  The graph shows linear (red), cubic (blue), and exponential (green) curves.

In terms of history, 50 years ago, we were still in the early part of the curve (green curve) you don’t notice much change – it’s slow.  But later (today, the future), it accelerates in front of our eyes.  Do you feel that the last 10 years of technology change has been more extreme than the previous 10?  Well, with exponential growth in computing power, the next 10 years will be even more pronounced – you ain’t seen nothing yet...  Ford adds

“Nearly all of us sense that our world is changing rapidly and that perhaps things seem to be speeding up. We’ve become accustomed especially to continuous improvement in technology. We notice that the laptop computer we buy today is dramatically faster and lighter and more feature-packed than the one we bought just a few years ago, and yet it costs less. Our new cell phone is smaller or lighter, but it does more”, Kindle location 517

Try this experiment to help drive home the power of exponential growth – Ford’s example (Kindle locations 543, 556, 558)

“To illustrate the extraordinary acceleration that this implies, imagine starting with a penny and then doubling the amount you have every day for a month; We pass the million-dollar mark at day 28 and end up on day 30 with over five million dollars; If we could continue the process for another thirty days, we would have an astonishing $5,764,607,523,034,235—or nearly six quadrillion dollars!”

Try it yourself on paper so that you see how slowly your money starts to grow and then how rapidly it leaps ahead.  The economic impact premise is that at some point, in the near future, technological improvements (that continue to grow exponentially) resulting in automation will increasingly and more quickly create permanent job loss.

“If at some point, machines are likely to permanently take over a great deal of the work now performed by human beings, then that will be a threat to the very foundation of our economic system. This is not something that will just work itself out. This is something that we need to begin thinking about”, Ford - Kindle location 217

The improvements projected are based on the view that with faster computers more capabilities that seem impossible today will be embedded in machines.  More machines will replace what people do today.  History teaches us that millions upon millions of jobs that used to exist have been replaced already.  Fortunately, new jobs have always been created as the economy increased in complexity and diversity.  But think for a minute about what jobs no longer exist or have been automated or what machines do that wasn’t possible before…  a few examples: telephone operator (plugging cables in to connect calls), bank tellers vs ATM banking / online banking, automotive diagnostics (computers), tax preparation (software, online), farming (highly sophisticated machines have replaced most farm workers for plowing, picking, milking, etc.), airplanes land themselves – pilots babysit, music production/distribution industry, newspaper industry (more failing every day), etc.  Automation is quickly disrupting work everywhere.  I won’t go into lots of details here – the books do a fantastic job of providing that.

“A single farmer with access to tractors, specialized machinery and chemical herbicides can now function almost entirely alone. No workers are required, and the labor content of cotton produced in West Texas is essentially zero.”, Ford – Kindle location 1829

So fundamentally, what if automation permanently displaces 50% of all jobs in our economy?  Or, 75% of all jobs?  Remember, our economy is  based on consumption who are the workers collecting wages.  Without consumers, there is no incentive for businesses to create and produce.  With 50-75% of all workers displaced without a source of income, who will consume all the goods and services produced by mostly automated businesses? Where is the market going to be?  Ironically, businesses are compelled to automate (invest capital) in our economic system – if they don’t, they can’t compete.

I hope you see that the economic system we currently enjoy isn’t sustainable if (when) automation takes over most work.  Welfare is not the answer.  Education on it’s own isn’t the answer.  In an automated economy, we will need a fundamentally different way of incenting people to contribute to society and to share in the wealth.  Who will figure this out?  According to Ford (Lights in the Tunnel), economists are viewing the future in light of the past.  They ignore the exponential increase in the power of technology and the impact of automation.  Also, most of us think it’s the lower paying factory jobs that get automated – that simply isn’t the case.  As computers become more powerful, they will appear to think and they will have sophisticated vision and pattern recognition systems (something humans are really good at).  It would seem that we need to prepare for a jobless future and figure out how to prepare ourselves and to adapt our free market economy for this potential reality.

Education has a tremendous role to play here.  Memorizing facts from the past will not help create a preferred future…  Fortunately, with all the talk of 21st century learning and skills, there is hope.  But, we need to act sooner than later.  We need teachers and students to be engaged in studying big problems and working on potential solutions.  We need to implement a 21st century curriculum, soon.  We can’t wait for our economists and governments to do this – change and hope needs to come from our classrooms.  Our students will inherit the future so it would seem wise to have them help determine it…