The Lights in the Tunnel Automation Accelerating Technology and the Economy of the Future_2 ppt

THE LIGHTS IN THE TUNNEL / 18 CopyrightedMaterial–Paperback/Kindle available @ Amazon erallyproduce onlyverydimlights. Inthirdworld coun- trieswithlittleornosafetynet,theseunluckypeoplewill likelybecastoutfromthetunnel,andtheirlightwilldis- appearentirely. Theimpactofautomationisstillverydifficulttodis- cernamongthemultitudeoflightsinthetunnel.Weno- tice,however,thatsomeofthebrightestlightsinthetun- nel are beginning to shine with even more intensity. As jobsareeliminated,many ofthebusinessesinthetunnel becomemoreprofitable.Someofthiswealthisthentrans- ferredtotheownersandtopexecutivesofthebusinesses. Asthisprocesscontinues,weseethebrighterlightscon- tinuetoslowlygainstrengthasmoreoftheaveragelights graduallydimorflickerout.Thedistributionofincomeis becomingmoreconcentratedinthetunnel. Now,finally,webegintoseearealdifferenceinthe tunnel.Itbecomesobviousthattherearefewerlightsand thatthenumberiscontinuingtodiminish.Justasthisrea- lizationstrikesus,weimmediatelyfeelthatthereisanew senseofurgencypervadingthepanelsthatlinethewallsof thetunnel.Thepanelsbegintodancewithmoreandmore desperatemotionandcolorastheyattempttoattractthe dwindlingnumberoflights. The businesses on the walls of the tunnel are now suddenly seeing significantly slower demand for their products and services. This is happening even though manyofthebrightestlightsinthetunnelhavecontinued togaininstrength. Imagine that your job is to sell as many $50 cell phones as you can in one hour. You are offered two The Tunnel / 19 CopyrightedMaterial–Paperback/Kindle available @ Amazon doors:Behinddoor# 1sitBillGatesandWarrenBuffet, thetworichestpeopleinAmerica.Behinddoor# 2area thousand average people. You may well be tempted to choose the first door just so you’ll get to meet Bill and Warren,butintermsofgettingyourjobdone,youwould probablyagreethatdoor# 2isclearlythebestchoice.This isbecausethedemandforthemassmarketproductsthat driveoureconomydependmuch moreonthenumber of potential customers than on the wealth of any particular customer. You are not going to be able to sell 40 cell phonestooneperson,nomatterhowwealthytheyare. Wecannowsensethatmanyofthebusinessesinthe tunnelareclearlyintrouble.Eventhoughtheyarecontin- uingtosavemoneyasautomationslowlyeliminatessome oftheirremainingworkers,thisisnotenoughtomakeup forthereductionin salestheyareexperiencing.Manyof these companies are now at the point where they must takeactiontosurvive. Agreatdealofeachcompany’sresourcesisinvested in factories, machines and equipment and offices. These things, whichan economistmight referto as capital, are very hard to quickly get rid of. For example, if you just boughtalotofnewautomatedmachinesforyourfactory, thenyouarestuckwiththem.Youcan’tjustreturnthem and get your money back if demand for your products suddenly starts to fall. For this reason, a business which seesrapidlyfallingdemandusuallyhasonlyonechoicein ordertosurvive:cutmorejobs.Weseethis,ofcourse,as partofthenormalbusinesscycle.Businessesroutinelylay offworkersinbadtimesandthenrehireingoodtimes. THE LIGHTS IN THE TUNNEL / 20 CopyrightedMaterial–Paperback/Kindle available @ Amazon Inthetunnel,wenowseethatthebusinessesarebe- ginning to cut more and more jobs. They are becoming more desperate and, in many cases, they must eliminate evenkeyemployeesthattheyformerlyfeltwerecrucialto theiroperations.Asthishappens,webegintoseesomeof thebrighterlightsinthetunnelrapidlybegintodim. The continuing decrease in demand falls especially heavilyonthemanufacturingbusinesseslocatedindevel- opingnationslikeChina.Thesebusinessesrelyonproduc- ingveryhighvolumeproducts,whichtheyexporttofirst worldnations.Theyarenowseverelycuttingjobsandthe flowofnewmiddleclasspeopleintothetunnelhasallbut stopped. As a result of the job cuts, the lights are becoming evenmoresparseinthetunnel.Manyofthebusinessesare now failing and whole regions of the tunnel walls are growingdark.Nowweseethatmanyoftheverybrightest lightsinthetunnelfinallyfeeltheimpactandalsobeginto losetheirlight.Theownersofthebusinessesinthetunnel areseeingmuchoftheirwealthgraduallydrainaway. The tunnelhas becomea far darker and more stag- nant place. We sense clearly that the hopes of even the remainingbrighterlightsaregraduallyevaporatingintothe newemptinessofthetunnel. The Tunnel / 21 CopyrightedMaterial–Paperback/Kindle available @ Amazon A Reality Check Clearly,oursimulationdidnotturnoutwell.Perhapsour initialassumptionaboutjobsbeingautomatedwaswrong. But, again, let’s leave that for the next chapter. In the meantime, we might wonder if we have made a mistake somewhereinthesimulation.Let’sseeifwecanperform sometypeof“realitycheck”onourresult.Perhapswecan looktohistorytoseeifthereisanythinginthepastthat mightsupportwhatwesawhappeninoursimulation. Let’sleaveourtunnelandtravelbackintimetothe year 1860. Inthe southern part ofthe United States, we knowwillfindthegreatestinjusticeeverperpetratedinthe historyofournation.Here,longbeforethenewlightof advancedtechnologyfirstbegantoshine,menhaddiscov- eredafarmoreprimitiveandperverseformofjobauto- mation. The injustice and moral outrage associated with sla- veryrightlyattractsnearlyallofourattention.Forthisrea- son, most of us don’t have occasion to think about the overall economic impact of slavery. At the time Abraham Lincoln was elected president, we know that while the Northern population’s moral objection to slavery was a primary divisive issue, there were also significant differ- ences and debate about issues relating to the differing economicsystemsoftheNorthandtheSouth. The Northern economy was built on free labor and entrepreneurshipandtendedtospreadopportunitymore equallythroughoutthepopulation.Incontrast,theSouth- ernstates relied onslavelabor, andwealthwasprimarily THE LIGHTS IN THE TUNNEL / 22 CopyrightedMaterial–Paperback/Kindle available @ Amazon concentratedinthehandsofwhiteplantationownerswho ownedmanyslaves.Oneresultofthissystemwasthatit wasveryhardforpoorerwhitestoadvancetheirsituation becauserelativelyfewfreelaboropportunitieswereavaila- ble. Documentedobservationsillustratetheimpactofsla- veryontheSoutherneconomy.InherbookTeamofRivals: The Political Genius of Abraham Lincoln, Doris Kearns Goodwin describes a journey that William Seward, who would years later become Lincoln’s Secretary of State, took in 1835. Seward traveled with his family from his homeinNewYorkStatetotheslavestateofVirginia. 5 As theSewardscrossintoVirginiatheyleavebehindthebus- tling towns and cities to which they had become accus- tomed. Instead, they travel a rough, deserted road with fewhomes,businessesortaverns.Dilapidatedshacksdot thelandscape,andthelanditselfseemstohavebeenas- saultedbypoverty.Duringhisjourney,Sewardobserved: “How deeply the curse of slavery is set upon this vene- rated and storied regionof theold dominion. Of all the countriesIhaveseenFranceonlywhoseenergieshavefor forty years been expended in war and whose population hasbeenmoredecimatedbytheswordisasmuchdecayed asVirginia.” 6  Itseemsclearthattherearesomedefiniteparallelsbe- tweenwhatwesawinoursimulationandtheslaveecon- omy in the South. We noticed that in our tunnel, the brightestlightsinitiallybecameevenbrighterastheaver- agelightsbegantodimandflickerout.Thisfitswellwith thefactthatmostwealthintheSouthwasconcentratedin The Tunnel / 23 CopyrightedMaterial–Paperback/Kindle available @ Amazon thehandsofrichplantationowners,whilethemajorityof thepopulationwastrappedinpoverty. Thereisoneimportantdiscrepancy,however.Inour simulation, the situation continued to deteriorate until even the brightest lights eventually began to lose their strength.Incontrast,slaveryintheSouthernstateslasted forovertwo hundredyears.Theplantationowners were abletoholdontotheirwealthatleastuntilthestartofthe CivilWarin1861.Ifoursimulationseemstoindicatethat aslave(orautomation-based)economyisdestinedtoun- dergo continuing decline, how is it that the slave states wereabletomaintainstabilityforsolong? TheanswerliesinthefactthattheSouthwasprimari- lyanexporteconomy.Thelargeplantationsproducedraw cotton which was then shipped to Europe and to the Northern states where it was manufactured into textiles andclothing.Itwasthisconstantwealthflowinginfrom the outside that was able to maintain the economy over time. Our simulation, of course, was of the entire world mass market, so there was obviously no export market available. In the simulation, we found that across-the- boardautomationofjobseventuallyreduceddemandfor productsandservicesasthenumberoflightsinthetunnel decreased. You can imagine that, if the South had been completely isolated economically with no outside trade allowed, it would likely have followed a path of decline similartotheonewesawinthesimulation. Infact,oneofPresidentLincoln’sfirstactsafterthe SouthernstatessecededfromtheUnionwastoimplement THE LIGHTS IN THE TUNNEL / 24 CopyrightedMaterial–Paperback/Kindle available @ Amazon acompleteblockadeoftheSouth.The blockadebecame increasingly effective as the years progressed—ultimately achieving a 95 percent reduction in Southern cotton ex- ports—and was certainlyan important factor in the out- comeofthewar.Bythetimethewarendedin1865,the Southerneconomywasincompleteruin.Onecanspecu- latethatiftheblockadecouldhavebeenmaintainedwith- outanactualshootingwartakingplace,theeconomicim- pactalonemighthaveintimeledtotheendofslavery. *  Summarizing Both our tunnel simulation and our examination of the Southern slave economy seem to support the idea that oncefullautomationpenetratesthejobmarkettoasub- stantial degree, an economy driven by mass-market pro- duction must ultimately go into decline. The reason for this is simply that, when we consider the market as a whole, the peoplewho rely onjobs fortheirincome are thesameindividualswhobuytheproductsproduced. Anotherwayofexpressingthisistosaythatalthough machines may take over people’s jobs, the machines— unlesswearereallygoingtojumpintothestuffofscience   * Isitreallyreasonabletodrawacomparisonbetweentheeconomic effects of slaveryand advanced machine automation? I would argue that the comparison almost certainly underestimates the economic im- pactofautonomousmachines.Becauseofitsinhumanity,slaverycar- rieswithitobviouscosts.Theseincludeboththedirectcostsofen- slavingunwillinghumanbeingsaswellaslostproductivity.Theown- ersofmachineswould,ofcourse,seenoneofthesecosts.Inaddition, machines,whichcanoperateessentiallycontinuously,obviouslyhave the potential to be far more productive than even a willing human workercouldbe. The Tunnel / 25 CopyrightedMaterial–Paperback/Kindle available @ Amazon fiction—do not participate in the market as consumers. Recallfromourexampleofsellingcellphonestothetwo billionairesortoathousandregularpeople,thatmakinga fewpeoplericherwillnotmakeupforlosingalargenum- berofpotentialcustomers.Thatmayworkforyachtsand Ferrarisbutnotforthemassproducedproductsandser- vicesthatarethebackboneofoureconomy. Attheverybeginningoftheautomationprocessthis effectwasnotatallclear.Thefirstbusinessestoautomate sawasignificantreductionintheircostsastheycutwork- ers, while the impact on the demand for their products was negligible—orin fact,demand mayhaveactuallyin- creasedforatime,astheywereabletolowertheirprices. Asaresult,theirprofits,andthereforethewealthoftheir topemployeesandshareholdersincreased.Thesewerethe brighterlightsinthetunnelthatinitiallybecamestronger. However,asnearlyallbusinessesinthetunnelcontinued toautomatejobs,atsomepointthedecreaseinthenum- berofpotentialcustomersbeganto outweightheadvan- tagesgainedfromautomation.Oncethishappened,busi- nesseswereforcedtocutevenmorejobs,whicheliminat- edevenmoreconsumersfromthemarketandcausedde- mandtofallstillfurther.Fromthispointon,theeconomy enteredacontinuingdownwardspiral. Nota veryhappy ending. However,we still needto examineourinitialassumption.Isitreallypossiblethat,at some point in the future, machines or computers could takeoverthejobsperformedbyalargepercentageofav- erage workers without new jobs within the capability of thesepeoplebeingcreated?Couldthatreallyhappen? THE LIGHTS IN THE TUNNEL / 26 CopyrightedMaterial–Paperback/Kindle available @ Amazon We’lllookatthatquestioninthenextchapter.We’ll alsolookatsomethingcalledtheLudditefallacy—whichis an established line of economic reasoning that strongly contradictstheresultwesawinoursimulation.  CopyrightedMaterial– Paperback/Kindle available @ Amazon  Chapter 2 ACCELERATION   Let’snowturntothequestionofwhetherornottheas- sumptionwemadeaboutjobsbeingautomatedinthefu- ture is a reasonable one. It might be helpful to start by turningthatassumptioninsideoutandlookingatitscon- verse.Ifyoubelievetheassumptionwemadeisincorrect, thenyoumustbelievethat: Technology will never  advance to the point where the bulk of jobs performedbytypicalpeoplewillbeautomated.Theeconomywillal- wayscreatejobsthatarewithinthecapabilitiesofthevastmajorityof thehumanpopulation. When you look at things this way, you might see some cause forconcern. The real problem, ofcourse,is that one offending word: “never.” Never is a very long time:itisthreehundredoraevenathousandyears.Never is,well,forever. Tomakethingsmorereasonable,let’slowerthestan- dardsomewhat.Let’sthinkintermsofourownlifetimes or the livesof ourchildren. Thatshould make theissue much more approachable and personal. After all, surely noneofuswouldwantsomethingdramaticallynegativeto [...]... obtained through the project is stored in databases and can be accessed by scientists and researchers via the Internet The result is a fantastic source of knowledge that continues to be analyzed and which is certain to result in innumerable future advances in the fields of genetics, bio-engineering and medicine An especially interesting development in the field of grid computing is the idea that unused... the first and most notable applications of grid computing was in the Human Genome Project This inEven much of biotechnology and genetics could be considered a type of information science because it is focused on cataloging and understanding the information in our DNA * Copyrighted Material – Paperback/Kindle available @ Amazon THE LIGHTS IN THE TUNNEL / 42 ternational project began in 1990 and was completed... released the MacIntosh The MacIntosh and its predecessor, the Apple Lisa, were the first commercially available personal computers to have a graphical interface and a mouse The university had purchased dozens of these new computers, and students were now using them in their courses rather than the mainframe The original MacIntosh ran at about one MIPS.9 In other words, it was about 1/7 as fast as the Amdahl... hundreds of cards Copyrighted Material – Paperback/Kindle available @ Amazon Acceleration / 33 Next, being very careful not to scramble or drop the stack of cards, you took them to a card reader machine You fed the stack of cards into the machine and your program was entered into a long line of other programs waiting for the attention of the computer After a time, in some cases hours, you went to the print... University of Michigan as a freshman with plans to study computer engineering Computer engineering was then a new discipline just introduced at Michigan and at a few other universities Up until then, no one had been quite sure that computers were important enough to merit their own engineering field The University of Michigan had one of the most advanced computing centers in the country The computer then in. .. appliances and in countless other places Computers are everywhere Copyrighted Material – Paperback/Kindle available @ Amazon THE LIGHTS IN THE TUNNEL / 40 In fact, we might speculate that both the power and the number of computers in the world are increasing at a geometric rate—or at least something close to it That is clearly an incomprehensible increase in our total ability to manipulate information... available The idea is to tie many computers together using special software A big computational problem can then be broken down into pieces and distributed across hundreds or even thousands of computers so that they can work on it simultaneously Grid computing has the potential to bring an unprecedented level of computing power to bear on difficult problems in the areas of science and engineering One of the. .. banks and mortgage companies made these loans in some cases because of honest miscalculation of the risks involved, and in other cases due to outright fraud With expectations driven by the housing bubble, many lenders may have had the rather callous attitude that, even * http://folding.stanford.edu and http://boinc.berkeley.edu Copyrighted Material – Paperback/Kindle available @ Amazon THE LIGHTS IN THE. .. form the foundation of future information technologies in the area of quantum computing; this will take computer engineering into the realm of individual atoms and even subatomic particles Even if such breakthroughs don’t arrive in time, and integrated circuit fabrication technology does eventually hit a physical limit, it seems very likely that the focus would simply shift from building faster individual... state -of -the- art mainframe machine manufactured by the Amdahl Corporation In my first computer programming course, we were assigned the task of writing and running a program using computer punch cards.7 To do this, you first went to the university bookstore and purchased a large box of blank punch cards These were similar to, but a little longer than, standard index cards You then wrote your program using . becoming evenmoresparse in the tunnel. Many of the businessesare now failing and whole regions of the tunnel walls are growingdark.Nowweseethatmany of the verybrightest lights in the tunnel finallyfeel the impact and alsobeginto losetheirlight. The owners of the businesses in the tunnel areseeingmuch of theirwealthgraduallydrainaway. The . of the businesses in the tunnel becomemoreprofitable.Some of thiswealthisthentrans- ferredto the owners and topexecutives of the businesses. Asthisprocesscontinues,wesee the brighter lights con- tinuetoslowlygainstrengthasmore of the average lights graduallydimorflickerout. The distribution of incomeis becomingmoreconcentrated in the tunnel.  Now,finally,webegintoseearealdifference in the tunnel. Itbecomesobviousthattherearefewer lights and that the numberiscontinuingtodiminish.Justasthisrea- lizationstrikesus,weimmediatelyfeelthatthereisanew sense of urgencypervading the panelsthatline the walls of the tunnel. The panelsbegintodancewithmore and more desperatemotion and colorastheyattempttoattract the dwindlingnumber of lights.  The . clearly that the hopes of even the remainingbrighter lights aregraduallyevaporatinginto the newemptiness of the tunnel.  The Tunnel / 21 CopyrightedMaterial–Paperback/Kindle available