As I watch the U.S. presidential campaign from abroad, I am intrigued that there is so much talk this year about trade, and in particular, the North American Free Trade Agreement (NAFTA). NAFTA came into effect in 1994 – that is 22 years ago! There have been five U.S. presidential elections since that time, and I sincerely cannot recall NAFTA being such a major issue in any of those elections until now.
NAFTA created a free trading bloc between the United States, Canada and Mexico. I was in law school in Washington, DC, when then President George H.W. Bush signed the agreement (in 1992), along with the then Canadian Prime Minister Brian Mulroney and the Mexican President Carlos Salinas. As NAFTA was an international treaty, the U.S. Congress had to ratify it, which it did in 1993, under then President Bill Clinton. I need to reach back into my memory, but as I recall at the time (I was studying some trade law), NAFTA was a really exciting development. It was creating the largest free-trade area in the world. It was a natural response to the increasing economic power of the European Economic Area that was emerging as a major competitive trading bloc (that is now the European Union). It also seemed like an appropriate development in the early days of globalisation and its promises of global peace and prosperity following the dissolution of the Soviet Union in 1991.
Globalisation was offered up as the great leveller, bringer of all goods cheap, the guarantor of world peace. Yes, some jobs would be lost as corporations moved their operations where the labor was cheaper, but that meant cheaper goods for all consumers! And, globalisation was supposed to make the “pie” bigger, meaning that increasing trade would bring increasing wealth to everyone. Moreover, losses to manufacturing jobs could also be looked at as an opportunity for societies to “progress” to some higher state of “service” economy that meant higher wages for everyone. Everyone would be a winner. And those GAP t-shirts were so cheap!
This is just how I recall some of the exuberance of the time.
Obviously this is not how things have turned out. In many cities and towns, manufacturing jobs lost to globalisation have not been replaced with higher-paid jobs in the service sector; globalisation has not been a leveller; and we do not have world peace. Moreover, two more major trade deals are currently in the news: the Trans-Pacific Partnership Agreement (TPP) recently signed by President Obama and 12 other countries in the Americas and Asia, excluding China. (You can read more about it here: http://www.bbc.co.uk/news/business-32498715). And the trade agreement currently being negotiated with the European Union called the Transatlantic Trade and Investment Partnership (TTIP) (You can read the European Commission’s view on it here: http://ec.europa.eu/trade/policy/in-focus/ttip/index_en.htm.)
No wonder trade is such a big issue in this election. But if NAFTA was renegotiated, and both the TPP and TTIP were scrapped, I can’t help asking whether we don’t still have a bigger problem on our hands. Isn’t technology, rather than trade, the bigger threat to job security today?
In my last post, I summarised the state of research into Artificial Intelligence very broadly. In this post, I want to think about the remarkable advances of ANI – Artificial Narrow Intelligence. This is not the AI of the future that potentially threatens our humanity. But it is the AI that is with us now, which is fundamentally altering our societies by creating all sorts of computers that can take over human tasks. This will push a lot of people out of work.
The other day I read an editorial in the New York Times called “Long-haul Sweatshops” about how to improve the lives of long-haul truck drivers, whose work has become more difficult as advances in technology (mostly in the name of safety) have actually resulted in making a difficult job much harder and potentially less safe. (http://www.nytimes.com/2016/03/09/opinion/long-haul-sweatshops.html?_r=0)
I found this ironic since I had also just read an article in the U.K. press about how self-driving lorries (trucks) are soon to be tested on U.K. roads. (http://www.bbc.co.uk/news/uk-politics-35737104) What will all of the truck-drivers do then?
We are seeing the consequences of economic insecurity brought on by globalization play out vividly in this year’s U.S. presidential election, but what is on the horizon seems to me an even bigger issue. Advances in ANI that translate into automation of jobs will be similar to the job losses wrought by “free trade”, but potentially much greater. The job-shifting will be to computers rather than to other people in developing economies, and the jobs affected may very well be the very “service” economy jobs that were supposed to absorb people displaced from the first round of globalisation. Indeed, AI for lawyers, bankers and analysts – very high-paying, highly skilled jobs – are already being affected. In many ways, the ANI that involves the analysis of information, and doesn’t require elaborate robot bodies, are most at risk.
Up to this point, some experts have argued that technological developments do not result in net job losses, but rather job shifting, and that tech advances are more positive than negative in terms of our lives and economies. One of the most quoted examples of this is the impact ATM machines have had on the banking industry. Instead of bank tellers losing their jobs, the introduction of ATMs have apparently freed the tellers from mundane tasks like depositing checks and allowed them to switch into more “customer relationship” roles. (This paper explores this phenomenon: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2690435.) However, ATMs are just the tip of the iceberg. With the advances in AI we are seeing today, where the very goal is to teach computers how to do human tasks better than humans, the outcome can only be job losses on an epic scale.
I do not believe we are prepared for this level of dislocation. Focusing on the U.K. for a moment, the consultancy firm Deloitte estimates that as many as 11 million jobs in the U.K. have a high chance of being automated within the next decade. (The surprisingly upbeat report about this development can be found here: http://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Growth/deloitte-uk-insights-from-brawns-to-brain.pdf.) To give this some context there are just over 60 million people in the U.K. (and not all of them are employed). Of course new jobs (for programmers!!) will be created while other jobs are automated, but no trade agreement that I know of has caused that much disruption. Nevertheless, job insecurity resulting from technology and automation does not seem to be getting much attention.
Tom Watson, a U.K. Labour politician noted in a recent article :
“There is no minister for this new technology. No special cabinet committee has been set up to come up with solutions. There is no royal commission to look at the economic impact robots will have, or the ethical dilemmas they will pose. Where is the new institution that brings together trades unions, employers and government to establish how the time liberated and wealth created by robots is equitably shared?”
Mr Watson goes on to add:
“… the golden age of the knowledge economy has not yielded all that it promised. The success of big tech platforms like Google, Amazon and Facebook has seen huge amounts of cash accrue to their balance sheets, but very little investment in social infrastructure, education, skills and health. The situation is worsened by the apparent inability of government to tax these tech giants.”
The current political climate is a testament to the poor policy reaction to globalisation. Blinded by its potential benefits (global peace and prosperity), not enough people were focusing on those who were being left behind. Something similar seems to be happening with the technology revolution. We are so impressed by the latest tech inventions and so anxious to reap the various efficiencies and other benefits that these inventions bring, I am not sure we are considering the consequences. The fact that the tech jobs that are supposed to replace the automated jobs pay more only fuels the enthusiasm…but I think I heard an argument like that once before.
I know that these issues can create huge ideological divisions, but they don’t have to.
Whether you lose your job to a worker living in Mexico or lose your job to a computer, the result for the domestic economy is the same. There is one less satisfied, contributing member in society. If this affects one or two people then maybe we can all ignore it, but when it is literally millions, then I think its time for a plan. Or to be more controversial, when the affected people are autoworkers in Detroit, or washing machine manufacturers in Indiana, maybe it takes a while to reach the political radar screen. What if the affected are financial analysts, wealth managers, engineers, doctors and lawyers?
Giant tech companies and hundreds of start-ups continue to develop their AI technologies and put them out into the market like any other products. They are making things cheaper, making our lives more convenient. But in some cases, these products are replacing jobs. Does this make them different to other “products”? Does it make these companies different to other companies?
I really don’t have the answers, but I would like to think that this issue will get people thinking as much as the trade debate has. And I hope it doesn’t take 22 years!