Don’t Blame the Robots
There’s More to the Two Americas Problem than AI
It’s not AI, but the centralization of tech and knowledge in general, that has created the two Americas. One America is a sprawling system of knowledge workers that has collected the excess GDP gains from the past hundred years. The Other America is whatever’s outside of that System, an America where everybody is one bad illness away from missing rent or one injury away from opioid addiction.
Like 9/11 before it, AI is the new fall-guy for America’s ills
The AI-is-evil theme is the only thing people can understand. Everybody’s familiar with the Terminator and Siri. But how can automation take credit for killing the workforce? There aren’t robots yet. 100% of vehicles are still driven by humans. Despite being the first great American carmaker in almost a century, Elon Musk is somehow now a symbol of a coastal tech elite that is marginalizing the Common Man. No, what killed the workforce is something else, something less obvious. But before we get to that, is employment actually under attack?
Never mind the nuances of labor statistics, the robots are coming for us
They say that employment is higher than it’s ever been, but more people have stopped looking for work than ever before. People are clocking just 5–10 hours a week working for Uber and Lyft or some other gig economy app and calling that employment. Just drive across America, or to a neglected neighborhood in your backyard, and look around. Now isn’t the lowest period of unemployment in the history of America. There exists an Other America that is hollowed out. But never mind the nuances of statistics, the robots are coming for us. As Trump tells it, there is no contradiction in saying AI is destroying American jobs and that America is greater than its ever been.
How do you identify the two Americas? One seems rural, the other coastal, but that’s not quite right. The janitors and delivery drivers who work in San Francisco, but commute one-and-a-half hours or more each way to get there, aren’t living the coastal American Dream. They may share the same sidewalk with the other half, but they know that they live worlds apart. The System redistributes money from capital markets to a big tent petite bourgeoisie, whereas everybody else only gets paid enough to have a television, a cell phone, and a car that’s mostly owned by creditors.
The System can be defined by the meaninglessness of its work
In some ways, the System can be defined by the meaninglessness of its work. A large segment of it includes tech or corporate workers, of which something on the order of 75% of them aren’t doing real work. They exist so that management can either maintain their budgets or keep workers on-call. It takes more time and money, and not to mention risk, to fire and re-hire a worker that you only need 50% of the time than it does just to keep them. The System’s payrolls are mostly insurance.
It’s not that their work is priceless, it’s just unpriceable
But the System isn’t just defined by tech. Doctors, attorneys, and accountants are all getting paid more than ever. What defines this class is that their work can’t be priced properly. It’s not that their contribution is priceless, it’s that the people who pay them are held hostage by the laws of recruitment. Certain kinds of creative and knowledge work have jettisoned away from other types of work, what is often called skilled labor, with the defining feature being that one is a commodity and the other not.
The term “skilled worker” is ironic, because what are all those office workers using if not skills?
Compare the social media specialist who earns $20/hr versus the secretary who earns $11/hr. They may not be any more or less skilled than each other, but the former likely has a college degree and can talk the talk, whereas the latter hasn’t navigated the secret handshakes necessary to create a PowerPoint that will convince management that if they don’t hire them, they will be missing out on reaching Millenials. Both employees have debt. One has exorbitant student loans, but the other is saddled with credit and auto debt, making it impossible to take on exorbitant student loans even if they wanted to.
If you don’t figure out the secret handshake to get into the System, you are either stuck unemployed, semi-employed or getting paid subsistence wages. If you can’t join the System, then you can’t get the American Dream: a house, a yard, and safe schools for your children. Instead, you’ll be commuting an hour or more into metros for the trickle-down that comes from ride-sharing gigs, spare change in the tip jar at a restaurant, or random jobs in busing, ushering, or forklift driving.
Teach a man to use a blow-torch, and he’ll live hand-to-mouth. Teach a man to use a spreadsheet, and he’ll qualify for a mortgage
As I’m writing this outside of a Starbucks, I notice a cell tower, and I imagine that the welder who put that tower together was paid at cost. However, the team of engineers who designed the tower wasn’t, nor was the project manager who organized those engineers, nor the communication and code compliance experts, nor the program managers who share all this information to senior managers, and so on. While there may have been a team of ten skilled laborers — the welders, crane operators, construction traffic coordinators — their compensation may have comprised a thirtieth of the total cost that went into making that tower happen. In other words, if you pick up a blow-torch, you’ll live hand-to-mouth. But if you pick up a spreadsheet, you’ll get a mortgage. The term “skilled” then becomes ironic, because what are all those office workers using if not skills?
How did we get here?
We could have seen the Two Americas problem in the mid-1990s when the specter of offshoring haunted us. Five-digit layoffs repeatedly made headlines at the time. But the dot-com boom distracted us from the underlying rot in work and the economy.
Ever since the Netscape IPO, tech stocks have been Wall Street’s go-to opioid for the masses
When Netscape went public in August 1995, skyrocketing from a $28 initial offering to $174 by the end of the year, Wall Street realized that they had found gold. Ever since then, tech stocks have been Wall Street’s go-to opioid for the masses. Tech stocks have two great things going for them. One is that their value is more often than not entirely in the future, making them great vehicles for speculation, and thus attractive products for Wall Street to push onto suckers. Normally, highly speculative products aren’t suitable for public markets. If a product is too speculative, it may even be regulated out of existence. But who knows? Maybe that random tech offering will one day be Microsoft or Intel.
Tech stocks are perfect because that they make great news items. Tech companies are always making or inventing things, whereas other companies, like McDonald’s, simply expand to new regions. Tech stocks make investors feel like armchair futurists. Traders can inspect a tech product personally and guess whether or not it’s going to change the world. Whereas if they had to trade a financial stock, like a bank, they would have to study a boring balance sheet.
Wall Street then used tech itself to expand the market for tech stocks, by offering low-commission, online trading. It seems hard to imagine, but before the 90s, trading was not accessible to ordinary people. Now, instead of people putting their money into a 401k and waiting for retirement, they can tune into CNBC, watch a relatively exhilarating media event — i.e., an IPO — then log on and trade that stock within minutes.
The late-1990s capital expansion gave the markets so much new life that it buoyed the economy, thus expanding employment where none was needed. (Fixing Y2K also provided a boost to payrolls). At the time, there was no better symbol of the pride before the fall than Sammy Sosa and Mark McGuire sauntering to the plate with their juiced-up muscles. The American public ate up every new home-run record, all the while they knew, on some level, that it was built on a lie.
When the dot-coms crashed in 2001, it should have corrected America back to the hollowed-out reality of the early-1990s, but then 9/11 diverted the nation’s energies from internal problems to external. The War on Terrorism became the fall-guy for all the ills that plagued America. We were distracted for just long enough for the next bubble, the financial one, to take hold.
The aughts were the decade when financial engineering became a real profession, giving us the moronic catchphrase, “innovative investment vehicle.”
I attended Stanford from 2000 to 2004, and the big recruitment workshops on campus weren’t for tech companies, but for investment banking. It turned out the dot-com boom was a trial balloon for a new intersection of techie and financier. The aughts were the decade when financial engineering became a real profession, giving us the moronic catchphrase, “innovative investment vehicle.” Finance people don’t look at crashes as disproving or invalidating anything. If anything, it emboldens them. The fact that a bubble can exist in the first place is the real opportunity, and it only means that you can ride the dragon again if you play your cards right. The boom showed that by loosening the parameters for public offerings and by lowering the bar via online trading, wealth could be created out of thin air. The tech crashed, but its financiers marched on, looking to the housing market for opportunities in financial innovation.
The housing boom took attention away from problems in manufacturing and other soon-to-be-obsolete industries. Even if you were laid off from your job as a machinist, you could find solace in your home equity increasing 15–20% annually. Even if you were in your 40s and 50s and found your hours reduced at work, you could always refinance and be the cool dad or mom bailing out your college-aged children. That is, until the 2008 Recession hit, when the same parents moved into their kids’ homes, if they were lucky. Everybody who wasn’t part of the new, now enlarged, knowledge economy, i.e., “the System,” lost their shirt.
In a way, the Obama years (2008–2016) were yet another distraction. Obama galvanized reactionary conservatives into attacking him, and by proxy, the complacent liberal base that supported him. The nightly news clips of liberals vs. conservatives, whether in the form of Tea Party protests, Occupy Wall Street sit-ins, or Black Lives Matters marches, became another way to channel our frustrations. It wasn’t until the Bernie-Trump-Hillary grid-iron that the division between the Two Americas became impossible to ignore. Trump and Bernie made the Two Americas story the centerpiece of their campaigns, and Hillary ignored its importance at her peril.
Thirty years ago, more knowledge was concentrated at the edges. When you needed your car fixed, you likely went to a neighborhood mechanic who could diagnose it just by listening to the engine idle. Now, the young buck who attends to your car probably just watched a video on how to attach a code reader to your car. When knowledge became centralized, it created a schism in skilled labor. Skilled laborers are now either redundant or a meta-skilled laborer, i.e., someone who programs machines to take the cognitive load off of humans. It’s not robots that killed the workforce, but our centuries-long quest to turn all work into knowledge work.