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Watson won a Jeopardy match against two very accomplished champions in 2011 and it gathered its information only by autonomously processing data from Wikipedia and other sources.
Since then IBM’s scientists have continuously improved Watson, and IBM is now working with several partners to develop products based on the technology. Currently applications are being developed for services ranging from financial advice, cancer diagnostics to freelance job search and shopping advice (IBM, 2015).
Ultimately what makes Watson special is its ability to process human language and gather information from it. It may or may not be close to reality yet, but taking the technology to the limits of its potential can imagine a virtual assistant computer program that is as capable of writing emails and conducting research as any human. After all, if Watson is capable of becoming a super human trivia expert by scanning Wikipedia, why should it not with a bit of modification be able to become an expert on any topic. If that becomes a reality, it could potentially displace a large portion of the 17,7 million “Office and
administrative support occupations” workers who make up more than 8% of the US workforce (Us Bureau of Labor Statistics, 2015). Whether or not IBM will ultimately be the first to introduce the defining intelligent algorithms remains to be seen. Even though for example Black Berry had a smart phone on the market before Apple, it is arguably Apple’s approach that has shaped the modern phone. And right now Google and other technology companies are investing heavily in artificially intelligent technology, so the race is very much on.
12 Would jobless growth be a problem?
It seems natural to assume that joblessness would be a problem with or without growth.
However obvious it might seem, it is prudent to examine this assumption with at least some level of scrutiny.
On a personal level unemployment is associated with stress, low self esteem, mental illness and depression (Schimmack, Schupp, & Wagner, 2007). According to Brenner
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(1979) it can even have medical consequences, such as an increase in cardiovascular disease, cirrhosis cases and even suicide.
More broadly, unemployment often brings an increase in xenophobia and protectionism.
Further unemployment over long time spans can cause an increase in crime, violence and unrest (Steininger & Rotte, 2009).
Of course to be critical of these claims, one might wonder if these sociological impacts are not better attributed to a perceived lack of purpose and lower social standing in
comparison with peers, than to the absence of paid work.
Imagine a distant utopian future, where only a very small percentage of the population is required to work in order to provide the sustenance and luxury required by the rest of the population. It seems unlikely that people would not be content living their lives with these
“unearned” luxuries and instead of comparing each other and identifying themselves in terms of workplace identity, and instead do so in terms of their standing in for example arts or sports. Perhaps in an imaginary society such as this, those prone to low self esteem, suicide and depression would then instead be those who were unable in comparison to their peers, to participate meaningfully in the unpaid social activities that people identify themselves through. Put in another way, perhaps what creates these problems is people not living up to the standards society expects of them and that the cause for these problems will change if this standard changes.
Regardless, besides these before mentioned socioeconomic implications of
unemployment, I would like to look at purely economic impact in terms of GDP. 50 years ago economist Arthur Melvin Okun showed empirically how unemployment and GDP are strongly related (Okun, 1962), and this relationship has been widely accepted since. But as this thesis wishes to examine, the relationship could be weakening, and the economy could possibly continue to grow without creating enough new jobs to compensate for the jobs that have been lost. This chapter will examine the possible economic problems that would be associated with such jobless growth.
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One way to see wages today is as a great equalizer and as the primary way of distributing national income among the middle and lower classes. If income shifts from returns on labor towards returns on capital, we will see a disproportionate increase of wealth of those with higher levels of capital and a drastic decline of those with less or none. In the long run capital and therefore income would gravitate towards a small subset of the population, creating great inequality. Under normal circumstances, subsidizing the unemployed too much is undesirable as it takes away the incentive to find self supporting means of income and contribute to the economy, but this is irrelevant if there simply are no new jobs to get.
With a simple thought experiment I want to examine how inequality lowers potential demand and thereby production and output in an economy when no new jobs are created.
Therefore, this example assumes that redundant workers can never find employment.
Also, the economy of this thought experiment assumes perfect competition and starts out with full employment. For simplicity’s sake, there are only 10 people in this economy and they produce roughly equally valuable goods. This works out such that a day’s produce of one person can purchase a day’s worth of produce of any other person in the economy (i.e.
everyone produces an output of value 1). Let us call this simple economy example A.
If all the people in example A build factories that made production ten times more
efficient, everyone could in theory enjoy ten times the amount of products, given that they all continued to work the same amount of time and a similar demand curve for each type of product. However, in reality the utility of each additional unit of product ordinarily decreases, people do not necessarily find as much utility in the tenth bread or shirt etc. as they find in the first. Let us assume in this example that this is not the case, and that the demand of the products in the economy are not perfectly elastic. Therefore, the
equilibrium of the new economy, with the new more efficient production, is that people will work less than before, but still enjoy more goods than before. Let us call this economy example B.
Now imagine that only 5 of the people were given possession of the more efficient means of production, such that they could efficiently produce all the types of products that used to be produced by all 10 members of the economy. The 5 people who are not in
possession of these more advanced means of production cannot find new jobs, but there is
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no reason they cannot still work their original jobs, and luckily for them the cost of all products have lowered exactly as much as their own produce. This means that the same logic they used when choosing to work full time in order to produce 1 output with a full day’s work in example A should still apply and they should therefore continue to produce and consume the same as in example A.
The 5 fortunate people will be no worse or better off in terms of consumption than the people in example B. Again, whatever logic they used to settle on a certain level of production and consumption in example B, should still hold true and the fortunate people should therefore produce and consume the same in this example.
Another way of thinking about that is that the 5 poor consume what corresponds to their own 5 units of production and in the same way the rich would consume what corresponds to their own produce among themselves. The rich each produce two types of goods
instead of one, but they now only produce for 5 people, so their combined amount of work and consumption is the same as for the people in example B. Let us call this unequal economy example C. See table 2 for an overview.
The size of the economy in example C (where only 5 people own the advanced means of production) is lesser than that of example B (where the means of production are divided between all 10 people in the economy). Additionally, the rich are no better off in example C. Comparing the three examples in terms of real GDP accounting also for the (massive) fall in prices (i.e. the inflation), a product in one example is directly comparable to the same product in the other examples.
Table 2 - Comparison of idealized economic scenarios.
Low income per capita productivity
High income per capita productivity
Total productivity
Example A 1 N/A 10
Example B N/A 1-10 Between 10 and 100
Example C 1 1-10 Between 10 and 55
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Therefore the more equal economy (example B) always has the same or higher output than the less equal society (example C) given no new jobs will be created.
I believe this shows that if we at some point approach a jobless growth scenario, we should reassess how we think about inequality, if for nothing else, only to maximize GDP.
13 Examining the evidence
This chapter will examine certain evidence for how technology has already begun to alter work. This will be done by examining how much of GDP output can be ascribed to the contribution of work, and how big a portion of output is paid out to wages. There is no indisputably conclusive evidence of a fundamental shift in the data being presented, if there was, others would certainly have picked up on it first. But hopefully, by examining different suggestive evidence, a credible case that we could now be at the very early stages of a fundamental change in the job market can nonetheless be made.