The Coming Automated Economy

The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future --By Martin Ford

Editorial Review From the Publisher

THE LIGHTS IN THE TUNNEL takes an in depth look at current trends in information technology and globalization and examines what the likely economic impact will be in the coming years and decades.

Here are just a few of the questions explored in the book:

How will job automation impact the economy in the future?

How will the offshore outsourcing trend evolve in the coming years?

What impact will technologies such as robotics and artificial intelligence have on the job market?

Did technology play a significant role in the 2007 subprime meltdown and the subsequent global financial crisis and recession?

Globalization. Collaboration. Telecommuting. Are these the forces that will shape the workplaces of the future? Or is there something bigger lurking?

How fast can we expect technological change to occur in the coming years and decades?

Which jobs and industries are likely to be most vulnerable to automation and outsourcing?

Machine and computer automation will primarily impact low skilled and low paid workers. True or false?

Will advancing technology always make society as a whole more wealthy? Or could it someday cause a severe economic depression?

What are the implications of advancing automation technology for developing nations such as China and India?

Will a college education continue to be a good bet in the future?

Recent economic data suggests that, in United States, we are seeing increasing income inequality and a dwindling middle class. How will this trend play out in the future?

What will be the economic impact of truly advanced future technologies, such as nanotechnology?

Retail positions at Wal-Mart and other chain stores have become the jobs of last resort for many workers.

Will robots and other forms of machine automation someday threaten these jobs? If so, what alternatives will the economy create for these workers?

And much more...

About the Author

MARTIN FORD is the founder of a Silicon Valley-based software firm. He has over twenty-five years experience in the fields of computer design and software development. He holds a computer engineering degree from the University of Michigan and a graduate business degree from the University of California, Los Angeles.

　Book Description from Amazon.com:

What will the economy of the future look like? Where will advancing technology, job automation, outsourcing and globalization lead? This groundbreaking book by a Silicon Valley computer engineer explores these questions and shows how accelerating technology is likely to have a highly disruptive influence on our economy in the near future--and may well already be a significant factor in the current global crisis. THE LIGHTS IN THE TUNNEL employs a powerful thought experiment to explore the economy of the future. An imaginary "tunnel of lights" is used to visualize the economic implications of the new technologies that are likely to appear in the coming years and decades. The book directly challenges conventional views of the future and illuminates the danger that lies ahead if we do not plan for the impact of rapidly advancing technology. It also shows how the economic realities of the future might offer solutions to issues such as poverty and climate change.

Two very cogent straightforward reviews of the book: 

Dan Usiskinj says:

This author gave a great deal of thought to his researched project. His book is an important contribution to the work force of the United states and its response to globalization and fair trade practices. If he is only half right than the world is in for volatility in its markets and the U.S. as well- and persistant unemployment above 7% and sluggish growth because jobs quickly become obsolete or saturated with workers looking for predictable incomes long term. He has done well in making his case and time will reveal thisl. say in the next ten years if he is right This said, One must be well rounded and seek information at every turn to get a fair perspective on macro economies. Obama touched on points in the Audacity of Hope, A stanford professor whose name I can't recall owns an international political consulting firm, watching cnbc, figuring out what portfolio managers are doing etc. This book in not a war of the World's scenario but a discourse that intelligently bestows its gifts on readers without endless foot notes and statistics and quantative verbocity. The author knows of what he speaks and again if he is half right, America is in for nasty volatility in its markets, labor shifts, and persistant high unemployment. What to do? Try synthesising what every country in the world does right......

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[3 stars] A serious and growing problem with few easy solutions, September 14, 2011 By John K. Hawley

Martin Ford's book, The Lights in the Tunnel, is one of the latest in a progression of books addressing the economic and social problems partially attributable to rapidly advancing technology. I think his problem analysis is spot on. However, I think his proposed solutions are impractical and probably unworkable. The allocation (or misallocation) of wealth created by the prevailing economic system is an historical problem, one that is being exacerbated by the growing skill-bias of technology. But I can't imagine that any non-market-based wealth allocation scheme developed and administered by government would end up being other than a welfare program or a mechanism for rewarding political "favorites." Politics and cronyism would replace merit and effort. Government can't escape the specter of politics. Like it or not, the market imposes a reality and discipline that is simply not present in most government decision making.

All of the above said, the economic and resultant social problems associated with the increasing skill-bias of technology are serious and not likely to be a temporary phenomenon. Moreover, I don't believe that solutions will be easy to develop or implement. In my line of work (a psychologist working systems acquisition for the US Department of Defense), we began to encounter this problem more than 30 years ago with the widespread introduction of information technology into military systems. Back in those days, we referred to it as "skill creep," and understood that it had significant design, aptitude, and training implications. What came in on cat's paws back in the 1970s is now becoming a perfect storm across the economic spectrum. I should also note that in spite of 30 years of experience with it, DoD still struggles to cope with the skill-bias effect.


Based on 30 years of hands-on experience with this issue, I don't think the end result will be as extreme as Ford suggests in his book. Technology-dominated, "smart" machines will still require human support--and for the foreseeable future, "guidance." However, fewer people will be required to fill this role, and their aptitude, educational, and training requirements will be high. This is the essence of the skill-bias problem. More and more people will be displaced from the traditional job ladder and find themselves either unable to get on or only able to get on at a lower level in so-called service industries. Many proposed solutions will run up against what might be called the bell-curve problem (mental ability is not evenly distributed in the population); and serious, across-the-board educational reform will be a necessity. Most current proposals for educational reform do not fit my definition of serious. It should also be noted that most of our efforts in the area of job "retraining" have not been particularly successful. Many of the things we are going to be required to do to manage this problem will not be politically correct or will not fit into our prevailing political and social worldview.

I agree with Ford that current trends in job off-shoring likely are a temporary expedient. China, India, and other low-cost countries eventually will face the many of the same issues we in the developed world now face. It will be interesting to see how China fares in its Red Queen race between economic growth and the rising expectations of the hundreds of millions of non-participants in its economic miracle.

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A discussion of comments about the review immediaterly above are included on Amazon.com and are selected by the blog author as posted below:

BLOWBACK NUMBER ONE: The American educational system of publically funded, unionized baby sitters spoon-feeding out of date politically correct babble enslaves the students and under-provides economic worth for the young adults at the end of the process. Therefore there will be a revolution in modernizing and computerizing education, to wit:

Woman in a Strange Land says:

I work in health care. The textbooks in place today to teach students the subjects I took many years ago, show a distinct focus on teaching to the lowest common denominator. This is a fundamental issue with overall education at this time. This country no longer teaches students how to be inovative thinkers. There is a cookie cutter style of teaching topics that is fundamentally simplistic. When I applied to Nursing school I had to take a really difficult entrance test. Only the top 3% percent were accepted into the nursing school. Now, there is a lottery system in place. Thus a really smart person can be in the same class as someone who is not as motivated or prepared for the rigors of learning how to advocate for patients. New grad nurses today are less prepared to care for patients with complex disease processes. Who wins in such a system? Not the patients, not the current health care system. This seems to be a wide-spread methodology of how higher education currently prepares people to meet the future needs of the country. It's sad that this country wastes so much money on poorly planned eduational systems that are not future focused.

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BLOWBACK NUMBER TWO: What happens to economic stratification once machines are doing the work, thinking and building newer machines? Here is a discussion and argument on that theme between Morgan P. Smith and C. Collins:

Morgan P. Smith says:

Massive displacement is one theory. However, it seems to me that having infinitely capable machines that will work for free should lead to leisure for the human race. It should be like having a race of slaves for everyone. I mean when you have robots building robots, the cost of goods should approach zero. The effort of the robots is not rewarded and they require no fulfillment. The bottom line is that if we build a race of machines to do all of the work, then work is unnecessary.
　
　
C. Collins says: Morgan,

"However, it seems to me that having infinitely capable machines that will work for free should lead to leisure for the human race."

The issue you raise is a question of redistribution, not of technology. It seems obvious to me that your scenario would only hold true within a system/society that is not afraid to redistribute (massively) its fruits to the many. That is, a society may - in principle - have the means to reliably increase the size of its economic 'pie', year-in, year-out, but this would tell us *nothing* about how that pie should/might be divided. So, to whom should the rewards go? This would be analgous to the days when the EU sat on vast food (e.g. grain and butter) surpluses whilst millions in African countries starved.

So, likewise, it could be the case that the lion's share of a country's national product is 'earned' only by an elite few - say, by those with PhDs or by those with very particular entrepreneurial abilities. As things stand, it is those few who will be rewarded accordingly. Thus, there is no *necessary* reason why the earnings of those few should be redistributed to the (redundant) many in any direct sense. So, how extreme would this tendency need to be, before the case for massive redistribution becomes overwhelming?

As I understand, in some arab countries, it was the case - don't know if this is still the case - that every national was paid a significant income, not because of what they did, but merely because they were fortunate enough to have been born in a country blessed with massively desirable natural resources. Sadly, however, relatively few seem to accept that they owe a debt to society at large, preferring to assert that they are truly the architects of their own good fortune. Anglo-Saxon cultures, like the US for example, have traditionally been geared towards fostering such attitudes and to rewarding the efforts of 'heroic' individuals, rather than geared towards acknowledging the simple fact that some are extremely fortunate, whilst many are much less so, i.e. outcomes are, essentially, arbitrary.

"It should be like having a race of slaves for everyone."

Yours is one possible outcome but, in practice, a far more likely outcome would seem to be one where a small elite would have entire armies of slaves whilst the rest of us would have to continue doing our own housekeeping.

"I mean when you have robots building robots, the cost of goods should approach zero."

I think this is predicated on a host of assumptions that are unlikely to hold true, short of unprecedented reform. For example, look at pharmaceuticals and at the 'economic rent' that pharmaceutical companies will try to squeeze from the market in the name of getting a return on their original investment. So, who would be the 'owner' of the technology that would enable such advancements - entire societies or only a handful of unfeasibly fortunate individuals and corporations?
　
Morgan P. Smith says:
Hello C.Collins,

'So, likewise, it could be the case that the lion's share of a country's national product is 'earned' only by an elite few - say, by those with PhDs or by those with very particular entrepreneurial abilities. As things stand, it is those few who will be rewarded accordingly'

My point is that in the extreme future of true thinking machines imagined by the author, there will not be anybody who is capable of producing value. The smartest PhD will also be useless in this rather extreme thought experiment. In a sense, the only value left is land and natural resources, where it all began! And rather than utopia, there would probably be wars.

I don't believe that thinking machines are due for quite awhile. I say that as someone who has spent 20 years programming stupid machines, and I find them to be quite faster, but not an iota smarter than when started.
　
C. Collins says:
Hi, Morgan

My point is that in the extreme future of true thinking machines imagined by the author, there will not be anybody who is capable of producing value."

Thanks for your response. On the one hand, however, it seems questionable as to whether that 'point' - to which you refer - is ever likely to actually be reached but my question relates - given your scenario - as to whether, there will remain an elite few who will be able to extract economic rent from 'ownership' of the technology embodied within the "true thinking machines" to which you refer. In a sense, it is those individuals or corporations who will, once again, 'own the means of production', just as did the 'capitalists' of the industrial revolution, and they will reap their disproportionate rewards irrespective of the fact that they 'produce' nothing.

On the other hand, if you are envisaging a wholly autonomous class of 'thinking machines' - humanoids, of some description - what would be their status, vis a vis mere humans, and what incentive(s) might they have to make *our* lives (i.e. those of humankind's) any better? Just wondering whether you might also have speculated upon these sorts of questions...

Of course, I may be entirely misconceiving what you have in mind. In any case, however, rest assured that I intend to read this book in the very near future.

C. Collins says:
Morgan,

"I don't believe that thinking machines are due for quite awhile... I find them to be quite faster, but not an iota smarter than when started."

On a slightly different note, then, do you think/believe that the defeat of Garry Kasparov, by Deep Blue, represented any particular kind of 'watershed' moment in terms of AI?

Morgan P. Smith says:
I'd love to create a forum somewhere for this topic! I actually find it a brain teaser. I , by nature, like to take things to an extreme and see what it looks like. The 'thought' experiment. So, yes, the point I am referring to is pretty well science fiction and very hard to talk about in practical terms. However, the author is envisioning software that can write legal opinions, do creative engineering work, be a doctor etc. That's pretty extreme to me given the technology of today. And if it ever happens, I don't think anyone could accurately predict the effect on society. I agree that history does indicate that the few will always try to control the many and I won't argue with that!

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Afterword by the Blog Author:
On the coming education revolution – stay out of education as a career if you are young! Live teaching in front of a blackboard is about to go the way of the stenographer, receptionist, secretary, bookkeeper and elementary school music teacher, all of which have been mostly or completely computerized.

The Morgan-versus-Collins arguments about smart machines and economic paradise or disparity: war or peace, comity or resentment are going to be decided by the emerging legal system. The only plausible alternative for sheer workability is going to be a system that becomes more civilized and logical as time goes on – and – the system that became better and better over the centuries, technological changes and mutations was English Common Law (although foolishly banished from American federal law by fiat of the Supreme Court in 1938). See my common law postings in the companion "Quiddity" blog (postings #30, #31, #32 and #33) clickable from this "Daily Quiddity" blog main page for details about the genius and durability of common law. To the extent that the author of The Light in the Tunnel favors governmental central planning instead of rule of law, due process and common law, I disagree with such a top-down boondoggle.

For examples of revolutionary advances that smashed empires, see American Theocracy by Kevin Phillips (2006).  This book is also discussed at length on the "Quiddity" blog.