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Aleksandrs Filipovs

Business/Psychology
16435111

Unemployment caused by automation of work


process and artificial intelligence applications

causes, evolution
and
implications...

Business in Society
BUS1009
Tutor - Diepiriye Kuku-Siemons

January, 2017
Arising concerns about unemployment caused by automation and artificial intelligence

is increasingly attracting attention of mass media. Will automation cause mass

unemployment? What jobs will disappear because of human-robot replacements, or is

it possible for human beings to adapt quickly enough for a rapidly emerging skill gap in

IT industry?

Automation and Artificial Intelligence has an undeniable force in a modern world.

It has slipped into our very core of lifestyles, values and culture. Although it has not

started just yesterday, it is all encompassing and hugely influential phenomenon which

is going to change literally every aspect of our life in near future and has already since

the industrial revolution of 19th century. It has not only changed us as human beings, it

has affected how the planet itself looks like. When such a transformational power

enters into a world's playground, it is hard to overestimate its influence on a society,

although some can argue on that topic, here we will look exactly how it happens on a

few examples from industries closely related and mostly affected by this process.

For example in UK where In 1841, 22% of people worked in agricultural and

fishing industry and by 2011 this had fallen to less than 1%, manufacturing industry

diminished from 36% to 9%, with services risen from 31% to a dominant 81%(The

National Archives and Census Analysis 2011, 2013). This is a significant shift that was

both painful and challenging on one side, as well as exciting and transformational on

the other. Google trend analysis (Google Ngram viewer, 2017) shows how these

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processes were interconnected with unemployment, in a media coverage over a period

in time, gaining peak correlation in 20th century middle 80s, exactly in the time of

creation of a World Wide Web. Also data from UK National Archive and Census

Analysis (2011) shows how perfectly mirrored were processes of recession in

Manufacturing and increase in Services, confirming how impactful is the emergence of

automation on the level of profession shift.

The reason this topic is urgent is that these changes though in a human evolution

span were already rapid in its own right, now considering whether exponentiating

Moores law changes the game rule in a more dramatic ways? People can certainly

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adapt, new professions can certainly emerge and job places created, but at what

pace? Reid Hoffman cofounder and executive chairman of LinkedIn thinks that the

creation of a lot of different economic opportunities where people can be

microentrepreneurs and the ability to facilitate because were in a networked age,

with a faster ability to have inventions and to scale up and double down on the

inventions that actually work will eventually level up the consequences of automation.

The other much more pessimistic scenario on the other hand where civil instability

caused by mass youth unemployment which is already an issue today, with raised

anxiety about their future can cause a chain of serious complications (McKinsey, 2014).

What will happen to 81% of a major service industry workers in UK when it will

undergo a sudden efficiency revolution with a replacement of an AI technologies in

finance sector or driverless cars in logistics and supply chains and AI based systems in

e-commerce, wholesale and retailing? What will happen to recently emerged giants like

UBER with estimated 500,000 to 1 million drivers worldwide hundred percent relying

on its drivers with the emergence of driverless cars? There are 17.78 million of taxis

approximately in the world which is a quarter of UKs population, and that is without

delivery drivers and public service transport drivers. In US alone by the end of 2016,

there will be over 4.1 million people who drive for a living. Over 3.5 million are doing it

full-time (Richter, 2016). According to US Census Bureau data the most common job in

90% of all the US states is a Truck Driver.

Recently Amazon (Hook and Doyle, 2016) has pioneered the industry with its Prime

Air which is completely automated drone delivery system, potentially eliminating the

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need to hire drivers delivering small to medium sized parcels in a near future, which is

basically over 80% of all deliveries. Ford company sales of autonomous vehicles might

account for 20% of its total sales in the US by the end of this decade. GM and other

automakers have similar plans (Bui, 2015).

Nowadays there are already innovations in Medical industry particularly in where

Googles Deep Mind artificial intelligence based Enlitics system was 50% better at

classifying malignant tumours and had a false-negative rate (where a cancer is missed)

of zero, compared with 7% for the humans. This system is currently being tested in 40

clinics across australia. Another example is the introduction of software capable of

analysing large volumes of legal documents might have been expected to reduce the

number of legal clerks and paralegals, who act as human search engines during the

discovery phase of a case; in fact automation has reduced the cost of discovery and

increased demand for it. Judges are more willing to allow discovery now, because its

cheaper and easier. David Talbot (2011) from MIT Technology Review organization

calls that a "Tectonic Shifts" in employment while Tim Worstall (2016) from Forbes

extrapolating from World Economic Forum data describes it as A Trivial Result Of No

Matter At All. Richard Cooper an American economist, policy adviser, and academic

explains that whatever changes happen, that will generate income and that income will

be spent, and that spending will eventually create new jobs and employment

(McKinsey, 2014). Michael Morgenstern from The Economist (2016) agrees with him

saying This notion that theres only a finite amount of work to do, and therefore that if

you automate some of it theres less for people to do, is just totally wrong, he says.

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Those sounding warnings about technological unemployment basically ignore the

issue of the economic response to automation, and is that it raises the value of the

tasks that can be done only by humans. And still, no matter how artificial intelligence

has invaded, some jobs likely to be better done by humans, especially those involving

empathy and social interaction. Therapists, hairdressers, personal trainers and

coaching specialist fall into that category. An analysis of the British workforce by a

Deloitte consultancy indicated a profound shift that has happened during past two

decades towards caring jobs: the number of nursing assistants increased by 909%,

teaching assistants by 580% and care workers by 168%.

Does that mean that all those drivers that eventually will lose their jobs due to

automation will reeducate themselves as care workers and nursing assistants? To what

extent these assumptions may really go according to a real life situations?

The whole phenomenon of unemployment due to automation and emerging AI

technologies raises a whole lot of Ethical questions and concerns. A very measure of

the bounty of brilliant machines displacing humans in a workplace is efficiency and

cost-effectiveness. Therefore arises a very much important questions such as a gap

between productivity and how its being distributed in terms of wages and the

degrading public policies. According to Economic Policy Institute since 1973

productivity has gained net 73.4% while hourly pay only 11.1% (Economic Policy

Institute, 2016).

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Rising productivity has provided the potential for substantial growth in wages for the

working majority. However, this potential has not been utilized, the income, wages and

wealth generated over the last four decades have failed to trickle down to the vast

majority largely because policy choices made on behalf of those with the most income,

wealth and power have exacerbated inequality. Laura Tyson professor of business

administration and economics, Haas Business and Public Policy Group, University of

California, Berkeley concludes If we had an inflation-adjusted, productivity-adjusted

minimum wage today, it would be something like $25 [an hour]. Its certainly not

moving forward at the level of the race. So the policy makers lose the race, and a lot of

displaced workers, a lot of American families, lose the race (McKinsey, 2014).

Automation increasingly eliminating middle tier jobs, as seen in a banking sphere

where oldstyle bank tellers are being replaced by interactive automated programs,

where high-skilled high paid jobs are opposed to low skilled low-paid ones with the

same tendency in customer care call centers and automated tills in retailing. This

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process it places business owners and technology developers in a position of power

and authority which can lead to a greater polarisation of incomes. World Economic

Forum (Bossman, 2016) lists 9 of emerging Ethical Issues in AI and consequent

automation of workforce, not surprisingly top 3 of them is Unemployment, Pay

Inequality and Machine influence on our humanity.

So there is a substantial and clear statistical evidence of the amount of changes

happening in the world due to automation of workforce as well as specialist opinion

opposed by some other thinkers suggesting that everything will eventually stabilize by

itself. While some think they can just relax and watch the show, others have attained

to a more responsible way of dealing with the issue. And the area being targeted for

this is of a great importance. That is Education, and the good thing about it that indeed

technology itself begins to create curricula that can transform education. Back in the

19th century, education was transformed by the needs of industrialization, such as the

introduction of universal state education based on a factory model where schools were

supplying workers with the right qualifications for factory work. The rise of artificial

intelligence and automation era can do the same again with the transformation of

education through the adaptive learning gauged to individual needs and delivered

online.

In July 2011 Sebastian Thrun, the professor at Stanford University has announced with

his colleague Peter Norvig the opening a new online course Introduction to Artificial

Intelligence. This was their course available online for free, and has received

application from 160,000 people in 190 countries. Another stanford professor Mr.

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Andrew Ng made one of his courses, on machine learning at the same time available

online. Both courses ran for ten weeks. Mr Thruns was completed by 23,000 people;

Mr Ngs by 13,000. Very quickly such online courses became known as MOOCs or

Massive Open Online Courses. In 2012 Mr Thrun has founded an online-education

startup known as Udacity, Mr Ng subsequently another one, named Coursera.

Harvard University and the Massachusetts Institute of Technology in cooperation and

in the same year formed an edX, a nonprofit MOOC provider, with Anant Agarwal, the

head of MITs artificial-intelligence laboratory as a CEO. Mr Thrun says he founded

Udacity as an antidote to the ongoing AI revolution, which will require workers to

acquire new skills throughout their careers. And the fact that Udacity, Coursera and

edX has emerged from Artificial Intelligence research laboratories emphasizes the fact

that AI developers has an ethical responsibility for providing the means of smooth

transition to the new technological era. Mr Ng notes - that given the potential impact

of their work on the labour market, AI researchers have an ethical responsibility to

step up and address the problems we cause; Coursera, he says, is his contribution.

One thing is clear the education cannot be the way it used to be, where you learn one

thing in depth once and that is what keeps you going throughout your lifetime, it is now

very much a lifetime of learning and reeducating yourself. And it is the employer's

moral and ethical responsibility to provide the willing workforce with requalification or

ongoing training. Working in partnerships with the providers and ensure the time

workers spend in learning are equally paid for.

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There are different concerns arising considering safety nets protecting people from

labour-market disruption and designed to help them switching to new jobs. Similar to

the ideas held by John Stuart Mill and Thomas Paine during the Industrial Revolution

many Ai commentators support the idea of a dramatic simplification of the welfare

system that involves paying a fixed amount (say, $10,000 a year) to everyone,

regardless of their situation. Those with a more pessimistic scenario of a labour market

disruption see it as a better way of supporting those in transition and to keep the

economy going. It also gives people more freedom to decide how many hours they are

able to work, encourages them to retrain by providing with a basic guaranteed income

(The Economist, 2016). The study of that idea is even funded by the YCombinator, in

Oakland, California US. Its president Sam Alman says that in a world of rapid

technological change, a basic income could help ensure a smooth transition to the

jobs of the future(The Economist, 2016). Some other countries like Finland and

Netherlands also looking forward to implement similar strategies of basic income in

2017, while some economists argue that basic living schemes might as well discourage

people from retraining and indeed working at all. Although studies from previous

experiments of basic pay schemes suggests that people tend to reduce their working

hours slightly rather than giving it all up. It can also attract a lot of immigrants from

abroad and cause domestic taxpayers to suffer the consequences.

This logically leads us to another implication where policy makers must correlate with

the impact of advanced automation and its effects on geopolitical environment as its

effects will benefit more some countries than the others. Nowadays economists talk

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about a premature industrialization (Rodrik, D, 2016) primarily caused by

manufacturing being much more automated with a peak 15% share in BRIC countries

comparing to Britain with 45% just before the first world war. With no manufacturing

jobs to establish a middle class, as seen by an economist at George Mason University

Tyler Cowen, such countries may have high income inequality baked into their core

economic structures(The Economist, 2016).

Unemployment caused by automation and Artificial Intelligence systems is an issue of

not so distant future and humanity is already starting to face the consequences. It is by

far much more a complex and all encompassing problem than just a single company or

industry issue. Changes required in education, legislative infrastructural and ethical

spheres. What is important is that in a pursuit of the change and benefits of automation

we do not ignore and abandon the value of human work. The fact that we as human

beings are not just men-hours in an economic turnaround wheel, but a willing

contributors of our precious life and energy to the well being of all. Appreciate that the

progress and the kind of benefits we have has not come out of nowhere, it came

through the lifetime of efforts of scientists, explorers and contributors of different kind.

Once the era of automation and artificial intelligence is upon us, the main adjustment in

policy making and legislation as well as human right bill should be the adjustment

stating the value of human work, and its efficiency that should not be measured

against the one performed by mechanic or digital devices. Single ownership of

companies with extra large profits or significant impacts on society should be rethinked

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in terms of legislative regulation. Cooperatives and alike organizations are the right

move towards this adjustment.

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References:

Rodrik, D. (2016) "Premature deindustrialization," Journal of Economic Growth, vol


21(1), pages 1-33 Available at: http://www.nber.org/papers/w20935.pdf
(Accessed: 5 January 2017)

Bossman, J. (2016) Top 9 ethical issues in artificial intelligence. Available at:


https://www.weforum.org/agenda/2016/10/top-10-ethical-issues-in-artificial-intelligenc
e/ (Accessed: 5 January 2017).

Bui, Q. (2015) Map: The most Common* job in every state. Available at:
http://www.npr.org/sections/money/2015/02/05/382664837/map-the-most-common-jo
b-in-every-state (Accessed: 4 January 2017).

Economic Policy Institute (2016) The ProductivityPay gap. Available at:


http://www.epi.org/productivity-pay-gap/ (Accessed: 4 January 2017).

Google Ngram viewer (2013) Available at:


https://books.google.com/ngrams/graph?content=automation%2Cartificial+intelligenc
e%2Cunemployment&year_start=1900&year_end=2000&corpus=15&smoothing=3&sh
are=&direct_url=t1%3B%2Cautomation%3B%2Cc0%3B.t1%3B%2Cartificial%20intell
igence%3B%2Cc0%3B.t1%3B%2Cunemployment%3B%2Cc0 (Accessed: 4 January
2017).

Hook, L. and Doyle, S. (2016) Amazon eyes far horizons for drone launch. Available at:
https://www.ft.com/content/04e09138-3944-11e6-a780-b48ed7b6126f (Accessed: 4
January 2017).

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Richter, W. (2016) Self-driving vehicle revolution to wipe out 4 Million jobs. Available at:
http://wolfstreet.com/2016/09/14/self-driving-vehicle-revolution-to-wipe-out-4-million-j
obs/ (Accessed: 4 January 2017).

McKinsey (2014) Automation, jobs, and the future of work. Available at:
http://www.mckinsey.com/global-themes/employment-and-growth/automation-jobs-a
nd-the-future-of-work (Accessed: 4 January 2017).

Talbot, D. (2013) Tectonic shifts in employment. Available at:


https://www.technologyreview.com/s/426436/tectonic-shifts-in-employment/
(Accessed: 4 January 2017).

The Economist (2016) Re-educating Rita. Available at:


http://www.economist.com/news/special-report/21700760-artificial-intelligence-will-ha
ve-implications-policymakers-education-welfare-and (Accessed: 5 January 2017).

The National Archives and Census Analysis 2011 (2013) 170 Years of Industrial Change
across England and Wales. Available at:
http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/on
s/rel/census/2011-census-analysis/170-years-of-industry/170-years-of-industrial-chan
geponent.html (Accessed: 4 January 2017).

Worstall, T. (2016) WEFs Davos report on robots, automation and job loss: A trivial
result of no matter at all. Available at:
http://www.forbes.com/sites/timworstall/2016/01/18/wefs-davos-report-on-robots-aut
omation-and-job-loss-a-trivial-result-of-no-matter-at-all/#21636d3b14f0 (Accessed: 4
January 2017).

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