When there is a legitimate “best book of the year” award, complete with a cash component, then the winning book is worth looking at. Well, this book won the Best Business Book of the Year award from McKinsey and The Financial Times. So I selected this book, presenting my synopsis of Rise of the Robots: Technology and the Threat of a Jobless Future by Martin Ford at the February First Friday Book Synopsis.
I wrote in my handout that this book is an economics book first and a technology book second. Though the book is filled with observations about the now never-ending march of technological progress, it adds the dimension of wrestling with the “what are the economic implications” questions of this technological march.
Regarding the “technological march,” Mr. Ford of course refers to the rise of robots, with all of the software and automation elements connected to this rise.
One impact of this rise is that valuation of companies is greater and greater per employee in the new “technology-based” companies. Here is a quick list:
2007 — YouTube – Google — $1.65 billion – 65 people — $25 million per employee
2012 — Instagram – Facebook — $1 billion– 13 people — $77 million per employee
2014 – What’sApp – Facebook — $19 billion – 55 people — $345 million per employee
In the book, he describes seven deadly trends:
#1 — Stagnant wages…
#2 — A Bear Market for Labor’s Share, and a Raging Bull for Corporations
#3 — Declining Labor Force Participation
#4 — Diminishing Job Creation, Lengthening Jobless Recoveries, and Soaring Long-Term Unemployment
#5 — Soaring Inequality
#6 — Declining Incomes and Underemployment for Recent College Graduates
#7 — Polarization and Part-Time Jobs
And, he includes three major forces that will shape employment in the retail sector going forward.
#1 — The first will be the continuing disruption of the industry by online retailers like Amazon, eBay, and Netflix.
#2 — The second transformative force is likely to be the explosive growth of the fully automated self-service retail sector— or, in other words, intelligent vending machines and kiosks. …In essence, the machines offer many of the advantages of online ordering, with the added benefit of instant delivery.
#3 — The third major force likely to disrupt employment in the retail sector will be the introduction of increased automation and robotics into stores as brick and mortar retailers strive to remain competitive.
Mr. Ford describes many of the ways that robots and automation have already (drastically!) lowered the number of human workers needed in “physical jobs,” but he is especially attentive to the growing use of software in replacing “knowledge workers,” beginning with the first Sports narrative written by software for a news outlet in 2009. Here’s a prediction, from the founder of Wired, quoted in the book:
At a 2011 industry conference, Wired writer Steven Levy prodded Narrative Science co-founder Kristian Hammond into predicting the percentage of news articles that would be written algorithmically within fifteen years. His answer: over 90 percent.
He especially points out the threat to “demand for products” that will be drastically reduced when robots do much of the work and there are no
customers to buy the products. He quotes the famous interchange between Walter Reuther and Henry Ford II:
The Ford Motor Company CEO taunts Walter Reuther by asking, “Walter, how are you going to get these robots to pay union dues?” Reuther comes right back at Ford, asking, “Henry, how are you going to get them to buy your cars?”
If, in fact, software begins taking over more and more “knowledge” work, then even education, the long-time firewall against the rise of automation, will not be enough:
The upshot of all this is that acquiring more education and skills will not necessarily offer effective protection against job automation in the future.
Here are my six lessons and takeaways from the book:
#1 – Physical jobs are threatened by robots. (robots = all software, computers, automation).
#2 – “White-collar” jobs; medical jobs; writing jobs; finance jobs – all jobs! – are threatened by robots.
#3 – This will lead to greater and greater income inequality.
#4 – Without demand, the threat to the overall economy is massive.
#5 – To be human (humane) and to drive demand, the only solution may be Guaranteed Basic Income.
#6 – And, this time is different. These coming problems are very real.
This is a book that deserves a slow, careful reading. I encourage you to read this book.
My synopsis of Rise of the Robots, with my multi-page comprehensive handout and the audio recording of my presentation, will be available soon on our companion site, 15minutebusinessbooks.com.