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TECHNOLOGY / CREATIVE DISRUPTION
How Do We Deal With This?

By JOHN F. McMULLEN

In a recent column, I quoted Clayton Rawlings and Rob Bencini, from their recent piece in “The Futurist,”  “What Does Moore’s Law Mean for the Rest of Society?” (http://www.wfs.org/futurist/2014-issues-futurist/july-august-2014-vol-48-no-4/what-does-moore%E2%80%99s-law-mean-for-rest-socie) themselves quoting  “Former North Carolina Governor Bev Perdue, almost accidentally, may have shown a fuller understanding of the true reality of productivity than most elected officials have. As the then-newly inaugurated governor in 2009, she was a featured speaker at the North Carolina Economic Developers Association conference, where she expressed supreme optimism about the areas of the economy that she believed would be central to North Carolina’s economic future: green industry, the military, and aeronautics.

“She continued her remarks with a matter-of-fact assessment by saying, ‘I believe the textile industry in North Carolina can still thrive. They might have to cut the workforce to increase efficiency and profitability, but…’

“She said it! She said what every business in America has said for the last six years. Workers, with their rising health care and other costs; workers, who represent a huge percentage of business costs and unproductive overhead during tough times; workers, who are the human measure of these “jobs” that elected officials promote; workers, who represent the biggest cost to virtually every company; yes, workers may have to be cut in order for a company to survive and prosper. Businesses are charged with making profits (and in this economy, surviving). Their disposition toward job creation is,“You’ve gotta be kidding. I’m trying to stay in business.”

They then added “The next time you think about job creation, try a little word exchange: replace the word jobs with the term payroll expense. Try it and see how it feels to say this: “We need more payroll expense!” or “Why haven’t you created more payroll expense?!” It sounds weird, doesn’t it? That’s what is truly relevant, because that’s how a potential employer sees the labor force. If a company is in survival mode, its goal is to increase profitability, not to create jobs.

The authors themselves didn’t seem overly concerned with the fall-out from this disruption, suggesting that government could convince businesses, not so much to “create jobs” in their line of business,  but to influence them to create public service jobs to address the needs of the community. I may be cynical but I think this will happen about the same time the alien spaceships land. They did, however, conclude the article with a statement that I consider profound, “The new technologies that once created new industries and new jobs are now only creating new productivity without the jobs. Computers, robots, artificial general intelligence, and other technological advances have changed the economic game. From a business point of view, improved productivity is good; but from the point of view of public officials desperate to create jobs for their constituents, not so much. This may be the biggest disruption we face.”

Ok – so if Rawlings and Bencini don’t have the answer, who does? I don’t know! Only a few people have publicly addressed the issue. Kevin Drum, in the May / June 2013 issue of Mother Jones, "Welcome, Robot Overlords. Please Don't Fire Us" (http://www.motherjones.com/media/2013/05/robots-artificial-intelligence-jobs-automation), was generally optimistic about our future, although he warned of programs along our path to technological euphoria. Drum wrote "By about 2040 our robot paradise awaits. But first we have to get there. And at this point our tale takes a darker turn. What do we do over the next few decades as robots become steadily more capable and steadily begin taking away all our jobs?" … "Solutions to this will remain elusive as long as we resist facing the real change in the way our economy works. When we finally do, we'll probably have only a few options open to us. The simplest, because it's relatively familiar, is to tax capital at high rates and use the money to support displaced workers. In other words, as The Economist's Ryan Avent puts it, "redistribution, and a lot of it."

(Also see other well thought out opinions on the subject: the essay, “Two Billion Jobs to Disappear by 2030 by Thomas Frey, executive director of the Da Vinci Institute (http://www.davinciinstitute.com/) and creator of the very interesting web site http://www.futuristspeaker.com/; ex-Secretary of Labor Robert Reich writes constantly about these problems on his blog (robertreich.org), in his many books, such as “Supercapitalism” and “Aftershook” (the basis for the Motion Picture, “Inequality For All‘),  and on Facebook (www.facebook.com/RBReich); and "a TED" presentation by MIT economist Andrew McAfee

(http://video.ted.com/talk/podcast/2013/None/AndrewMcAfee_2013.mp4), McAfee is co-author with Erik Brynjolfsson of the "Race Against the Machine" (http://www.amazon.com/Race-Against-Machine-Accelerating-Productivity/dp/0984725113.)
I have quoted all the above in other articles in this series and, while their analysis all makes sense, nothing in the form of movement toward solutions has come as a result of them. Perhaps the movie, “Inequality for All,” can catch the attention of those who have previously been oblivious to the working world around them and to the fact that technological innovation kills jobs.
For examples of this reality, one only has to go into any bank and see teller stations for 6 to 8 workers but only 2 or 3 people working at the desks; ATMs and online banking has the teller jobs that were once the entry points for higher paying jobs later in careers – or – go into a local supermarket or a home fixtures store and find many check-out counters closed while there are self-service ones open.
For a specific example, one can look at the recent Microsoft layoff announcement. The aforementioned Robert Reich commented on Facebook “Microsoft says it will cut up to 18,000 jobs next year to “streamline” its business. Microsoft now employs 125,000 people. In an era of increasing technological advances, the logical endpoint is a few humongous companies raking in hundreds of billions a year with a handful of employees. When more and more can be done by fewer and fewer, the profits will go to an ever-smaller circle of executives and investors. But the rest of us won’t be able to afford to buy what these companies produce because we’ll either be unemployed or serving the wealthy in menial jobs paying almost nothing. The old economic model was mass production by many, mass consumption by many. Will the new one have to be production by a few, redistribution to the many?”
Google Co-founder Larry Page, in an interview with Vinod Khosla at a Knosha Ventures interview (http://www.businessinsider.com/larry-pages-on-unemployment-2014-7), had another answer, saying in part, “You just reduce work time. Everyone I've asked — I've asked a lot of people about this. Maybe not you guys. But most people, if I ask them, 'Would you like an extra week of vacation?' They raise their hands, 100% of the people. 'Two weeks vacation, or a four-day work week?' Everyone will raise their hand. Most people like working, but they'd also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have jobs.”
My initial reaction to Page’s plan is that it would cost employers scads of money to implement such a plan – the employees getting a reduced workweek would fight tooth-and-nail to not have their salary reduced – they have based their current lifestyles, including mortgage, car loans, and credit card debt on their present salary – and the reduction of employee hours would, as Page says, require the hiring of additional people. This increased cost would force employers to increase prices, making them less competitive in the global marketplace.
It seems to me that the only way to make such a move tenable to employers would be a restructuring of their present costs and the only way I can see to do that would be to eliminate their health care expense by instituting a “Medicare for all plan.”
Such a move in this direction would result in massive lobbying from the insurance companies but it makes sense by itself. Figures that I have seen show Medicare administrative costs at 4.5 cents per $1.00 of revenue as opposed to ten times (10 X) for private insurance companies (the cost differential is usually attributed to the high salaries at the top of these organizations and the cost of the constant advertising that they do). The insurance companies would be free to offer the supplementary plans as they do now and employers would be free to pay for that coverage for their employees.
Every doctor to whom I’ve poised the question “What should we do about the health care system has immediately responded that we need a “single-payer system.” While my “survey” was admittedly very small (under 10), it was done with doctors whom I consider both experienced and very bright. One of them, who considers himself very conservative, said on my radio show that “Health care should be free for all and paid for through taxes. It is a human right.”
While I agree with Dr. William Merlino, the author of the quote, I see the chance of such a bill being passed by this dysfunctional government as “ranging-from-none-to-none.” I know that Senator Bernie Sanders (I-VT) is reportedly planning to introduce a bill but I see no hope for its passage. So, as you may understandably ask, if nothing will change, what is the point of all this? The major point is that it is becoming more and more apparent to more and more people, including CEOs and Senators, that we have an on-going problem as technology eliminates jobs of every type (Microsoft’s announcement that it will lay-off 18,000 employees is an example of this) – and the more that policymakers think about this, the more apparent it becomes that “tweaking” (such as authorizing additional funds for re-training) won’t solve the problem. There will be a need for some radical restructuring of our economic system – whether it’s the process described above or the revamping of our tax structure as Kevin Drum suggests to allow fewer people to support more or some plan yet undefined. Progress will only be made if more and more people understand the problem attendant to “creative disruption” – many less jobs created than eliminated – and demand that our leaders at least pay attention to the problem. There will not be easy solutions -- we must remain competitive in the world market place while having domestic tranquility and providing fair and comprehensive services to all our citizens. I repeat – there will not be an easy solution but one must be found and it must be found “sooner rather than later.”
Creative Disruption is a continuing series examining the impact of constantly accelerating technology on the world around us. These changers normally happen under our personal radar until we find that the world as we knew it is no more.  
John F. McMullen is a writer, poet, college professor and radio host. Links to other writings, Podcasts, and BlogTalkRadio broadcasts at www.johnmac13.comhttp://www.johnmac13.com/.
Your comments are welcome. Direct them to: johnmac13@gmail.com

 

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