Welcome to the Age of the Obsolete
“Artificial Intelligence is More Profound than Fire or Electricity” Google CEO Sundar Pichai
Welcome to The Age of the Obsolete
Obsolescence is defined as the process of becoming outdated or no longer useful. When we think of being obsolete, what we think of is old technology, rusted machinery, cars that no longer run. Things.
But is it possible for people to also become obsolete?
For the past 150 years, the American Dream has meant that each generation would rise — both socially and economically — beyond the one that preceded it. From the stories of Horatio Alger to the waves of immigrants entering Ellis Island, America has always been seen as the “Land of Opportunity,” a fertile ground where hard work and determination would be rewarded by continued financial success.
Traditionally, when we talked about the future, what we talked about was owning our own home, sending our children to college, retirement and financial security. Unfortunately, that dream is in danger of dying.
Today, the American Worker is under attack. From rising prices to stagnant wages, every step forward is matched by two steps back. Currently, there are three economic forces Impacting our livelihood as well as the future of work.
Since 1975, the income gap in the United States has steadily widened to where today, the top 1% command the Lion’s Share of wealth. According to recent reports, eighty-two per cent of the wealth generated in 2017 went to the richest one percent of the global population.
Billionaire wealth has risen by an annual average of 13 percent since 2010; six times faster than the wages of ordinary workers, which have risen by a yearly average of just two per cent.
The number of billionaires rose at an unprecedented rate of one every two days between March 2016 and March 2017. In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year.
In an interview on PBS, economist Paul Krugman argues that this is a trend driven not simply by the greed of the nouveau riche but by the ingrained power of Inherited wealth.
INCOME INEQUALITY: “The world has moved on a long way in the last twenty-five years and not in the direction you’re going to like because we are seeing not only great disparities in income and wealth but we’re seeing them get entrenched, we’re seeing them become inequalities that will be transferred across the generations. We are becoming very much the kind of society we had imagined we were nothing like. Suppose that your family has a large fortune. The inheritors of that large fortune can live very well and still put a large fraction of that fortune aside and the fortune will grow faster than the economy. So, the big dynastic fortunes tend to take an ever-growing share of total national wealth. You’re talking about a situation in which dynasties come increasingly to dominate the top of the economic spectrum. When you have a few people that are so wealthy that they can effectively buy the political system, then the political system is going to tend to serve their interests and is going to reinforce this shift of income and wealth towards the top.”
The second force impacting how we work stems from the Financial Crisis of 2008. Since that time, the majority of new jobs created in the U.S. have been in the area of freelance, part time or contract services — a GIG Economy without benefits or security. A 2017 article in WIRED Magazine describes this phenomenon:
“THE GIG ECONOMY gets its name from each piece of work being akin to an individual “gig.” At its core are app-based platforms that dole out work in bits and pieces — making deliveries, driving passengers or cleaning homes. Not all gig economy roles are based around a technology platform. Gig economy workers can also work for more traditional companies, which have changed how their staffing system operates. The companies ruling the gig economy say they bring the flexibility to work whenever you like. Critics — which include many of those working for the companies — argue that not only do workers lack protection and fair pay, but the roles aren’t as flexible as they seem, as workers are incentivized or pressured to work when the companies need them. On top of that, workers aren’t paid benefits such as holiday or sick pay, and reports suggest some aren’t making minimum wage. That’s legally possible because gig workers aren’t seen by the companies they work for as employees but contractors.”
But perhaps more troubling that income inequality or the shift to part-time work, are studies by Oxford University and other research organizations which estimate that over the next two decades, the confluence of artificial intelligence, automation may result in …
… the elimination of up to 47% of the jobs that exist in the U.S. today.
According to Andrew MacAfee of the MIT Sloan School of Management, these are not simply, ow-wage, low skilled jobs, but, also white-collar positions in the financial, legal and healthcare professions.
ALL JOBS ARE AT RISK: “The median American worker doesn’t do manual labor anymore. The average American worker is not a ditchdigger but they’re also not doing incredibly high-end particle physics or data science. They are what we call knowledge workers. And that is the sweet spot of where disruptive technologies are making the greatest inroads. A good example is a tax preparer who has mastered the very complicated American tax code. Applying that code to an individual has recently become fairly easy to automate with software like Turbo Tax. That’s great news for us as consumers. The people negatively affected are the tax preparers who are actually above-average educated. They’ve been to college, they’ve gotten an advanced degree, some have gotten a C.P.A. They’ve done the right thing. They’ve invested their human capital in an area they thought would lead to a long and productive career and suddenly here comes a forty-dollar piece of software that’s putting a lot of downward pressure on their careers and wages.”
Previously, the process known as structural unemployment meant that the technological destruction of jobs would be balanced by the creation of new jobs that would take their place. While it’s true that emerging technologies will create new and often challenging work, most economists agree that these jobs will be far fewer and require far less people.
That’s why policy makers around the world have begun to look for ways to offset the damages caused by technological unemployment. In addition to the reeducation and upskilling of those who have been displaced, a key part of the discussion is the concept of a “Universal Basic Income” — a guaranteed payment to every citizen to serve as buffer against the inequalities of what’s become known as the Fourth Industrial Revolution.
Speaking at the annual meeting of the World Economic Forum in Davos, Erik Brynjolfsson, co-author of The Second Machine Age, described the problem:
THE FOURTH INDUSTRIAL REVOLUTION: “This is one of the biggest revolutions in in human history but it’s not all good because many people are not participating in this revolution. The reality is that there’s no economic law that says that everyone’s going to benefit from a technological advance. It’s possible for some people, even a majority of people, to be left behind. For most of history that’s not what happened. But in the past ten, twenty years there’s been so many people left behind. The shocking statistics are that the median income in the United States is now lower now than it was fifteen years ago. According to recent McKinsey study, over eighty percent of households have not seen any real income gains and so you can understand why people feel upset and don’t feel the system is working for them. My own view is that there’s a tectonic change happening in the underlying technology of our economy and that’s it’s playing out in terms of the kinds of jobs that can be affected.”
Whether or not a vast number of the current jobs in the U.S. will be eliminated remains controversial and open to debate — one driven by the possibility that in the near future, a significant portion of the U.S. population may become –
Economically Obsolete.
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