Will AI Wreak Havoc on The US Economy? Probably Yes.

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Automation will probably destroy a lot of jobs. But will it create enough?

For the first part of this post click here.

This isn’t the first time people have wondered about advancements in technology destroying more jobs than it creates.

In other words, this type of movie has actually played out plenty of times before as well.

Back in the 1900s, according to most statistics, close to 40 percent of all United States workers toiled hard on farms.

Fast forward to 118 years later, the percentage of workers working on farms is 2 percent.

Moreover, back in the 1950s, The United States had a good 24 percent of all its jobs in the manufacturing sector.

That number has come down to 9 percent today.

And this hasn’t happened to the United States of America only.

Such shifts have actually occurred all over the globe wherever developed countries have tried to use advances in technology to boost their economy.

The only difference in today’s changes is that, the modern automation-led advancements in technology are happening at a faster rate than ever before.

Not only that, these advancements in technology are broader in their scope than ever before.

This has left people with very little time to adapt to these advancements.

A good portion of the workers have simply preferred the way of giving up looking for and finding a new decently-waged job.

The proportion of US citizens seeking work or working, in other words, labor-force participation, has shown economists a worrying drop.

That is especially true for men who are between the ages of 25 and 54.

Two economists at the University of Maryland, Katharine Abraham and Melissa Kearney, have tried to look at the why’s of the current situation.

According to these economists, the number of reasons why people have stopped looking for new work could be many.

However, they say that automation and robots have definitely played a critical role in the drop in the percentage of labor-force participation.

A lot of people who did not get a college degree find it easy to go along with the thinking that their prospects of searching for and finding a high-paying job are too narrow for them to consider it as a worthy activity.

Growth is slowing in the US And inequality is going up.

As mentioned before, despite all the advancements in the field of AI, robotics, and automation, productivity has not gone far beyond being sluggish.

Moreover, the percentage of people who have managed to enjoy the benefits of these advancements has fallen when compared to previous technological revolutions.

The net workforce growth is slowing.

In order to boost growth while that happens, the US needs to have more AI.

But that’s not all.

Along with more AI, companies in the United States of America will have to learn how they could better deploy AI in the coming years.

Anne Case, an economist at Princeton, and Angus Deaton, her co-author, recently identified something that some have called a related trend to the current situation.

These researchers found out that the mortality rate among white middle-aged people living in the United States without having a degree beyond a high school diploma was rising.

They also found the usual culprits for the high mortality rate.

Namely,

  • Alcoholism
  • Drug addiction
  • Increased rate of suicide.

Deaton and Case call these factors as diseases of despair.

Why?

Because these factors don’t really have much to do with poverty per se.

However, they are related to disappointments.

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Strangely enough, in a real reversal of one’s expectations, some US citizens are coming to the realization that they won’t necessarily be better off when compared to their parents.

According to these researchers, automation might represent a cause that people can blame for the rise of these social problems.

With that said, if economists such as Acemoglu have identified the right causes for such problems, then the key factor for the country to create a massive number of jobs lies not in stopping the advancements in AI, robotics, and automation but better advancements in AI, robotics, and automation.

Companies will have to come up with better versions of these advancements.

Moreover, they will have to deploy these advancements faster.

And they will have to do so throughout the economy rather than through a small portion of it.

Reinventing Pittsburgh

In essence, that is exactly what cities such as Pittsburgh are attempting to do.

They are trying to reinvent themselves in order to fully benefit from the advancements in fields such as AI, robotics, and automation.

So far though, Pittsburgh has had mixed results in doing that.

According to the dean of computer science at Carnegie Mellon University, Andrew Moore, the transformation of Pittsburgh with the help of young, new people who are working the fields of robotics and AI have been spectacular.

However, Andrew Moore, furthered added that the new transformation represented more of an approach of gentrification.

In other words, recent developments have not catered enough to the inclusion of the larger community.

In truth, such criticisms do resonate in cities like Pittsburgh which prides itself as a city with a big working class and strong labor unions along with the rich and expansive history of progressive politics.

Uber came to the city when Mayor William Peduto came in and helped to convince it.

But since attracting Uber to the city, the mayor has actually soured on the company based in San Francisco.

Recently at a city hall interview with MIT Technology review, Peduto said that the Silicon Valley development model didn’t quite put the people of the area in its equation.

The model actually based its operations on what amount of returns will the businesses derive for Venture Capitalists.

He also said that in cities such as Pittsburgh and Detroit, when people looked at work and its future, they wanted to know the future of work as it related to the worker itself.

If the results from a recent poll are to be believed, then more than 50 percent of the people living in Pittsburgh strongly supported Amazon (the e-commerce giant) to build the company’s second headquarter in the city.

That percentage (more than 50) is far higher than any other city that Amazon has shortlisted for its second headquarter.

Cities such as Boston and Austin have also made it to the company’s shortlist of cities but only 33 percent of the people living in those cities have said that they would welcome the move from the technology giant.

To move its headquarters to one of these cities, Amazon, as a company, has pledged to invest $5 billion to develop the chosen city.

The company has also promised 50,000 jobs for the people of the city.

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As far as cities as Pittsburgh as concerned, such an offering could prove itself as a transformative move.

Rumors have it that authorities in the city are trying their best to tempt the technology giant to set up shop in Pittsburgh by offering the company sites such as Mill 19 and others along the Monongahela River.

However, if Amazon does finally pick Pittsburgh as the location of its second headquarter then that would likely exacerbate the already high anxiety that the local population, as well as the company itself, would have on how to match new high-tech and high-paying jobs with the residents of the city.

According to Moore (dean at the computer science department, Carnegie Mellon University), the city and the region had nowhere near the number of people with enough technical skills to cover the gap.

Moore also added that Pittsburgh had a great history in terms of producing rare and genius leaders, however, the city really needed to work on leveling up its local population as far its technical skills were concerned in order to take part in such projects.

Of course, the challenge that cities like Pittsburgh as well as the rest of the country need to face is to not only bring in more people into the high-tech workforce sector but also expand the current short supply of all those high-tech and high-paying jobs.

Cities like Pittsburgh can really benefit from modernized factories enabled via advanced robotics.

Such advancements would also make US manufacturing a bit more competitive.

However, there is no denying the fact that a lot of the factory jobs that the economy has lost over the years will probably never come back.

The United States of America as a country, has struggled to imagine a future where it would have to build an entire economy with a good amount of jobs for people centered around automation and artificial intelligence.

Any person who stands on the currently flat roof of an old building in the neighborhoods of Lawrenceville shouldn’t find it hard to get a nice glimpse of the coming future.

That future, would have a large garage on the first floor of the building for the housing requirements of the many self-driving cars that Aurora is testing.

Then, off in one of the many weedy fields would be a Caterpillar backhoe which would belong to the company’s research outpost specially set up for autonomous machines.

Moreover, beyond that would be a testing area (all fenced-in) right next to another one of the many former steel facilities which would belong to Carnegie Robotics.

That testing area would enable the company to work on its bomb-clearing robots which it would then provide to the US Army.

Another imposing home and building in the background is the, now, National Robotics Center.

Pretty soon, it too will move to the area that Mill 19 represents where the Advanced Robotics of Manufacturing Institute has already covered some turf.

There is no doubt about the fact that the scene looks impressive and has plenty of highlights signs if one is smart enough to know where exactly to look.

Some of the world’s leading robotics and automation research institutes have come to Pittsburgh to try out their test products.

Even with that, the area is pretty much dead quiet.

One would find a very few number of cars parked in the parking lots.

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They probably belong to programmers and engineers who are involved in various activities related to robotic ventures.

Of course, some cars would also belong to visitors.

But beyond that, one would be hard-pressed to see any signs of regular workers in any corner of these facilities.

Important people and their opinions

As mentioned before, the Democrat elected five years ago in 2013, Mayor William Peduto, has managed to get himself in the center of Pittsburgh high-tech reincarnation.

Talking to some of the reporters, he answered questions that might be on a lot of people’s minds especially those living in the city.

When reporters asked on the best way to make use of advancements in technologies, Peduto said that he did not see much good in the development of autonomous vehicles if they were only going to create higher levels of traffic congestion on the city’s streets.

He further added that what good would technology do if it denied the people of the area mobility unless and until they purchased a smartphone device or had a credit card.

Peduto said that people should really think hard about whether they were creating a better society going this way or not.

And if the answer was a not, said Peduto, then there was no point in investing in such a technology.

When asked about the region that surrounded Pittsburgh he said that Pittsburgh’s neighbors that existed along the Rust Belt were still moving through a recession.

Moreover, these neighborhoods still had not seen any portion of the new high-tech economy connecting to their own in a direct manner.

Some believe this is also one of the reasons why the current president of the United States of America Donald Trump managed to win so much in these regions.

He offered the people living here a false narrative.

A narrative that involved him bringing back the mines and all the mills.

The Democrats did not do enough hard work to offer these people any semblance of hope.

Telling a person who has a generation worth of building and making things that he/she was going to need some retraining to work as a coder is something that anyone would consider an insult, according to Peduto.

When asked about the new type of jobs, Peduto said that his management did not desire to have any input in the creation of a society that only catered to PhDs.

Peduto said he wanted one where they were able to include GEDs.

On the top of Pittsburgh’s progression as a city, Peduto said that they were still at the beginning.

Beginning of what?

Beginning of Pittsburgh’s next phase of development.

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Peduto said that a lot of people who managed to live through the 1980s and 1990s would tell people that those were the best days.

Why?

Because Pittsburgh moved through the aforementioned decades exporting skilled people pretty similar to how the city exported steel.

Peduto said that Pittsburgh had to endure a slow death as far as its former economy was concerned.

However, Peduto had confidence that the time has come for Pittsburgh to move past that and build a more diverse and robust economy.

In that respect, Pittsburgh was at the very beginning of the whole process.

When reporters asked questions on what lesson would he give to Silicon Valley executives, he said that he would remind them that Pittsburgh was there before Silicon Valley even came into existence.

According to Peduto, Pittsburgh was the place where a great amount of wealth was created and where all the high-paying jobs were generated about 100 years ago.

However, Pittsburgh also created that polluted air which was unhealthy to breathe and poisonous water which wrecked people’s health and also a great disparity between those time’s haves and the have-nots.

In short, Peduto wanted Silicon Valley executives to learn from the history of Pittsburgh.

Answering a question about Amazon coming to Pittsburgh, he said that the company made it pretty clear to them that they would make a decision about building their second headquarter somewhere in 2018.

However, after that, they did not give Pittsburg any specific timeline.

 

Technology that is increasing inequality

Laura Tyson, while talking about inequality, said that according to her thinking the concerned entities had come to a consensus which was based on what they knew from the past 30 years alone about what would happen as a consequence of all the technological change that was happening so fast.

According to Tyson, such a change would be skill-biased and labor-replacing.

Moreover, she said that such a kind of technological advancement would lead to a continuing erosion of the country’s labor force share in the national income.

It would also lead to a growing wage inequality as well as growing income inequality.

Laura also pointed out that the pace of recent developments in automation would increase.

And it would spread to even more sectors, occupations, task, and skills.

Hence, the new wave of technological change wasn’t just growing at a rapid pace but was also growing in terms of its breadth.

 

Zohair

Zohair

Zohair is currently a content crafter at Security Gladiators and has been involved in the technology industry for more than a decade. He is an engineer by training and, naturally, likes to help people solve their tech related problems. When he is not writing, he can usually be found practicing his free-kicks in the ground beside his house.
Zohair

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