1. Expect massive disruption
As Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, explains, we’re in the midst of a “Fourth Industrial Revolution”, after steam power (the first), electric power (the second) and digitization (the third). The fourth, which incorporates AI and robotics as well as other technologies, will have an even greater impact.
Of course, most new technologies create new opportunities at the same time as they eliminate old jobs, but there is rarely a perfect correspondence between these two forces. The people whose jobs go away aren’t easily retrained for the new jobs and that can lead to anger and social unrest — and, in the short term, massive inequalities, across both geographies and groups of people.
It’s essential to prepare for change by keeping abreast of new technologies, both in general and in your specific field. Learn as much as you can and keep your skills up to date.
2. AI will replace repetitive tasks more than jobs
Recent studies, including one from McKinsey and another from the OECD, have poured cold water on earlier estimates that nearly half of American jobs are at risk of being eliminated by AI.
Newer studies look at specific, repetitive tasks instead of whole jobs and find that, for most of us, some fraction of the work we do each day could be done better with AI. But for most jobs, computers aren’t going to replace everything we do.
For the majority of us, AI will take away the most repetitive and boring tasks, enabling us to spend more time on creative problem-solving and on the parts of our jobs that involve complex human interactions and relationships.
To help prepare for this future, investigate AI-powered tools in your own field. Learn how to use them and exploit them to increase your own productivity.
3. Middle-skilled jobs will be hit hardest
The job market will not, however, be untouched by automation. The OECD estimates that 9% of US jobs are in principle automatable. If that happens, it’s going to have the worst effect on people with mid-level skills. Both mid and low-level jobs will be the easiest to automate, but there’s a stronger business case for replacing mid-level workers with machines because they are more expensive.
If the people replaced by AI and robots aren’t retrained well, they’ll be forced to apply for low-skilled jobs, leading to an oversupply of workers at that level and depressing those wages even further.
At the same time, there will be fewer people qualified for high-skilled jobs, increasing wages in that segment. This dynamic, if unchecked, will hollow out the middle of the job market and lead to even greater polarization.
To mitigate the impact, society needs to provide education and job placement opportunities for those most affected by automation.
4. Opportunities will be unequally distributed — at first
Over time, jobs will return. But they won’t be the same kinds of jobs and they will, in all likelihood, appear in different parts of the country to the jobs that automation has destroyed.
For instance, researchers Daron Acemoglu and Pascual Restrepo have examined the impact of robots on jobs in the US. What they found is a strong regional impact: for every new robot introduced in a particular metro region, an estimated 6.2 jobs were lost in the same geographic area. But when examining the country as a whole, they found that the impact was about half or equivalent to three workers losing their jobs for each additional robot.
One possible explanation is that the automation of industrial jobs in the Midwest and US south is partially offset by new types of jobs in coastal cities.
But that’s no comfort if you’re living in one of the states with a net decline in jobs. Those who have lost their jobs need retraining and we need an education system that prepares all our children, not just a privileged subset, for the jobs of the future.
We also need to acknowledge the uneven geographic impact of automation and take steps, as businesses and collectively as a society, to increase opportunity in geographic areas that are affected adversely.
5. Technology designers have responsibility
The ethical mandate is not just in education, but also in the design of technology products themselves. Autonomous technologies are not value-neutral with respect to the jobs they impact.
Carnegie Mellon robotics professor Illah Nourbakhsh makes the case in a recent podcast that the makers of robots and AI software need to think ethically. Are they creating technologies whose sole purpose is to replace human workers or are they facilitating human productivity and happiness?
Designers, computer scientists and CTOs all need to understand the ethical implications of how we create and use robots and AI. This needs to be a topic of discussion among business leaders on national and global stages. Merely calling for a universal basic income is sidestepping the question: technology makers need to account for human dignity and work in their very products.
6. The long-term trend can be positive — if we make it so
Eventually, after the Industrial Revolution, there were at least as many jobs as there were before and they were better ones. The net result was an increase in productivity and in the number of people employed, which raised overall wealth. But that wasn’t a foregone conclusion.
In the 21st century, we’re facing a massive change in the technologies and types of jobs available, similar to that faced by our grandparents in the early 20th century. Like them, we can’t be certain that both productivity and employment will rise.
We, as a society, need to make the commitment to guide our technologies responsibly and to capitalize on the prosperity we are creating, just as those who came before us did. That way we will ensure that AI technology creates opportunity for all, not just for a lucky few.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.