I don't normally find myself defending job displacement, but in recent years and months a great deal of confusion and herding has been taking place, much of which isn't based on evidence, so have recently entered the fray.

 

The automation trend started much earlier than 35 years ago, of course, during which time enormous numbers of jobs were created by customers of the automation. While it's certainly true that perhaps as many as a billion or more were displaced, most from subsistence farms in Asia, the net job creation was massive during entire time. Certainly no disagreement from me that U.S. main street and middle class were the net loser in this trend, which was based on official policy and driven too much by global corporations--it was the U.S. reaction to the trend that was the most tragic. 

 

Rather than pursue a competitive trajectory similar to post unification of Germany in the 1990s, which included structural retraining and state-of-the-art industrial tools, the U.S. employed financial engineering that created two major bubbles and crashes, the latter of which was the financial crisis which can be prevented with the best governance and analytics tools today (ironically requires automation). The same is true with 9/11, leading to two wars and additional trillions lost--hundreds of thousands of lives, and most human-caused corporate events, from whale trades to fraud, record fines, most Black Swans, etc. So if we are to look at job displacement from automated methods and related technology, which is I think appropriate and wise, we should also look at the cost of not using state-of-the-art automated systems. As one of the leading experts on human caused crises, please trust me that nothing during the past two decades has been more costly in terms of economic damage or job loss than refusing to employ automated preventative systems in large organizations.

 

 

The good news is that leadership in organizations are finally embracing innovation towards positive use, including job creation and business growth, rather than just downsizing and displacement. What is abundantly clear is that protectionism doesn't work in a hyper competitive global economy--not for long, whether a company or a nation. Like companies, those countries that continue to reject productivity and competitiveness (especially those that are the most costly), they will lose the economic battle to those who embrace same, like China which is now I believe the largest net buyer of robotics in response to a workforce that has become increasingly uncompetitive. China is clearly attempting to avoid the mistakes the U.S. and much of the EU have made in attempting to move up the IC scale rapidly rather than experience the boom bust cycle of the West. While it remains to be seen whether they will succeed, China is a legitimate threat to the "Northern Atlantic Malaise", increasingly including advanced automation. 

 

Fortunately for the U.S., we are seeing an impressive rebound in manufacturing, but we should note that even with new factories and automation--including impressive numbers and types of new good paying jobs in automated factories, we are seeing a major shift in the U.S. Future displacement is occurring that cannot be fully appreciated yet.  New companies and factories are setting up shop in more competitive environments, just as they always have and will continue to do as long as we have even a hybrid capitalist system. That is to say that it makes economic sense for a large factory in South Carolina that competes globally, but not in the much higher cost centers. 

 

This should be viewed as a wake up call in the U.S. to become more competitive. Unfortunately, we've been on a trajectory of borrow and spend, calling it investment, when we needed to be aggressively retooling for the future. Not in liberal arts colleges for the formerly wealthy, or necessarily even in universities, but low cost high impact vocational training using all tools available. The U.S. is in an economic war. It is well beyond the time for the culture to react accordingly, and stop relying on borrowing from the future to subsidize denial.

I recently wrote a related article that was featured over at Wired that may be of interest:

Fear of Artificial Intelligence vs. the Ethics and Art of Creative Destruction

 

Mark Montgomery

Founder & CEO