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The robot paradox, continued

You can see the robot age everywhere but in the labor statistics, I wrote a few months ago, channeling Robert Solow. The popular and often alarming predictions of a looming unemployment crisis, one that would stem from rapid advances in robotics, artificial intelligence, and other computer automation technologies, have become increasingly hard to square with the economy’s rebound to near full employment. If computers were going to devastate jobs on a broad scale, one would think there’d be signs of it by now. We have, after all, been seeing remarkable gains in computing and software for many decades, while the broadband internet has been working its putative magic for more than twenty years. And it’s not like a shortage of corporate cash is curtailing investment in technology. Profits have been robust and capital cheap.

Still, even as jobs rebounded from the depths of the Great Recession, overall wage growth has appeared sluggish, at times stagnant. It has seemed possible that the weakness in wages might be the canary in the automated coal mine, an early indication of a coming surge in technological unemployment. If humans are increasingly competing for jobs against automatons, of both the hardware and software variety, that might explain workers’ inability to reap wage gains from a tightening labor market — and it might presage a broad shift of work from people to machines. At some point, if automation continued to put downward pressure on pay, workers would simply give up trying to compete with technology. The robots would win.

But even here, there’s growing reason to doubt the conventional wisdom. For one thing, earnings growth has been picking up, hitting an annualized 4.2 percent in July, its highest mark in a decade. Second, and more telling, the wage statistics may not have been giving us an accurate picture. The sluggishness in earnings growth may have been something of an illusion all along, a distortion resulting from a combination of demographic changes in the American work force and post-recession labor market dynamics. That’s the implication of a new study of wage growth in this century from the Federal Reserve Bank of San Francisco. The researchers found that average wages have been depressed by two unusual trends: (1) Baby boomers are retiring at a high rate, and they’re being replaced by younger and less experienced workers. The inexperienced workers are naturally being paid less than the veteran workers they’re replacing, which in the labor statistics appears as a drop in pay for those jobs. (2) A lot of the workers getting full-time jobs have either been unemployed for a while or are moving from part-time to full-time posts. These workers, too, will tend to earn below-average wages in their new positions, which also serves to pull down average wages. As the researchers explain: “Counterintuitively, this means that strong job growth can pull average wages in the economy down and slow the pace of wage growth.”

When you adjust the numbers for these factors, the wage picture improves considerably. “Overall,” the researchers report, “these factors have combined to hold down growth in the median weekly earnings measure by a little under 2 percentage points, a sizable effect relative to the normal expected gains.” Here’s the money graph from the Fed report:

The black line in the middle tracks wage growth as reported in the labor statistics. The dotted red line shows the effect on the numbers of recent changes in the makeup of the workforce. The dotted blue line shows what wage growth looks like when you account for those demographic shifts — when you isolate, in other words, the actual changes in the wages of employed, full-time workers. What you’re left with, clearly, is a much brighter and much more typical picture. As the Fed’s economic research director Mary Daly told Bloomberg, “Wage growth, when cleaned up, looks consistent with other measures seen in the labor market.”

I’m sure this research won’t be the final word on the complex issue of jobs, wages, and technological unemployment. But the findings do provide further reason for skepticism when examining claims that a robot horde is about to eat the job market.

Postscript: In a new article in Wired, Andrew McAfee, coauthor with Erik Brynjolfsson of the influential book The Second Machine Age, says he now regrets the stress he placed on automation’s impact on overall employment: “If I had to do it over again, I would put more emphasis on the way technology leads to structural changes in the economy, and less on jobs, jobs, jobs. The central phenomenon is not net job loss. It’s the shift in the kinds of jobs that are available.” I think that’s right, but I’d add another concern that will become more pressing: the impact of automation on the structure of jobs themselves. Human beings and computers are going to be working together, more closely than ever, and we need to get the division of labor right. The “robots are taking over” rhetoric is a distraction from what’s most important about the second machine age.

Image: still from Lost in Space.

The virtual postman never stops ringing

In the latest issue of New Philosopher, I have an essay, “Speaking Through Computers,” that looks at how the form and content of our speech have been shaped by communications networks, from the postal system to social media. It begins:

Much modern technology has its origins in war, or the anticipation of war, and that’s the case with Google, Facebook, Snapchat, and all the other networks that stream data through our phones and lives. The Big Bang of digital communication came on the morning of August 29, 1949, when the Soviet Union carried out its first test of an atomic bomb. The explosion jolted the U.S. government, and the American military soon began work on a vast air-defense system, known as Semi-Automatic Ground Environment, or SAGE, to provide early warnings of air attacks on North America.

The system required a fast computer network. Readings from radar stations would be collected in digital form by mainframes stationed around the continent, and the data would be sent in real time to other computers at command centers and air bases. The output would be a complete picture of the sky at every moment. There was just one hitch: computers at the time worked in solitude; they didn’t know how to talk to each other. The Air Force called in the crack engineers at Bell Labs, and they solved the problem by devising a digital modem able to turn the ones and zeroes of computer code into electrical pulses that could be sent over wires. The telephone lines that for decades had carried the conversations of human beings now carried computer chatter as well. The melding of personal and machine communication had begun. . . .

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The soft tyranny of the rating system

In his darkly comic 2010 novel Super Sad True Love Story, Gary Shteyngart imagines a Yelpified America in which people are judged not by the content of their character but by their streamed credit scores and crowdsourced “hotness” points. Social relations of even the most intimate variety are governed by online rating systems.

A sanitized if more insidious version of Shteyngart’s big-data dystopia is taking shape in China today. At its core is the government’s “Social Credit System,” a centrally managed data-analysis program that, using facial-recognition software, mobile apps, and other digital tools, collects exhaustive information on people’s behavior and, running the data through an evaluative algorithm, assigns each person a “social trustworthiness” score. If you run a red light or fail to pick up your dog’s poop, your score goes down. If you shovel snow off a sidewalk or exhibit good posture in riding your bicycle, your score goes up. People with high scores get a variety of benefits, from better seats on trains to easier credit at banks. People with low scores suffer various financial and social penalties.

As Kai Strittmatter reports in a Süddeutsche Zeitung article, the Social Credit System is already operating in three dozen test cities in China, including Shanghai, and the government’s goal is to have everyone in the country enrolled by 2020:

Each company and person in China is to take part in it. Everyone will be continuously assessed at all times and accorded a rating. In [the test cities], each participant starts with 1000 points, and then their score either improves or worsens. You can be a triple-A citizen (“Role Model of Honesty,” with more than 1050 points), or a double-A (“Outstanding Honesty”). But if you’ve messed up often enough, you can drop down to a C, with fewer than 849 points (“Warning Level”), or even a D (“Dishonest”) with 599 points or less. In the latter case, your name is added to a black list, the general public is informed, and you become an “object of significant surveillance.”

As Strittmatter points out, the Chinese government has long monitored its citizenry. But while the internet-based Social Credit System may be nothing new from a policy standpoint, it allows a depth and immediacy of behavioral monitoring and correction that go far beyond anything that was possible before:

The Social Credit System’s heart and soul is the algorithm that gathers information without pause, and then processes, structures and evaluates it. The “Accelerate Punishment Software” section of the system guidelines describes the aim: “automatic verification, automatic interception, automatic supervision, and automatic punishment” of each breach of trust, in real time, everywhere. If all goes as planned, there will no longer be any loopholes anywhere.

The government officials that Strittmatter talked to were eager to discuss the program and to emphasize how it would encourage citizens to act more responsibly, leading to a happier, more harmonious society. As one planning document puts it, “the system will stamp out ‘lies and deception’ [and] increase ‘the nation’s honesty and quality.'” Those sound like worthy goals, and the rhetoric is not so different from that used in the U.S. and U.K. to promote governmental and commercial programs that employ online data collection and automated “nudge” systems to encourage good behavior and social harmony. I recall something Mark Zuckerberg wrote in his recent “Building Global Community” manifesto: “Looking ahead, one of our greatest opportunities to keep people safe is building artificial intelligence to understand more quickly and accurately what is happening across our community.” I’m not suggesting any equivalence. I am suggesting that when it comes to using automated behavioral monitoring and control systems for “beneficial” ends, the boundaries can get fuzzy fast. “Of all tyrannies,” wrote C. S. Lewis in God in the Dock, “a tyranny sincerely exercised for the good of its victims may be the most oppressive.”

What’s particularly worrisome about behavior-modification systems that employ publicly posted numerical ratings is that they encourage citizens to serve as their own tyrants. Using peer pressure, competition, and status-establishing prizes to shape behavior, the systems raise the specter of a “gamification” of tyranny. Nobody wants the stigma of a low score, particularly when it’s out there on the net for everyone to see. We’ll strive for Status Credits just as we strive for Likes or, to return to Shteyngart’s world, Hotness Points. “Our aim is to standardize people’s behavior,“ a Communist Party Secretary tells Strittmatter. “If everyone behaves according to standard, society is automatically stable and harmonious. This makes my work much easier.”

The master and the machine: on AI and chess

“A Brutal Intelligence: AI, Chess, and the Human Mind,” my review of Garry Kasparov’s new book Deep Thinking: Where Machine Intelligence Ends and Human Creativity Begins, appears today in the Los Angeles Review of Books. Here’s a bit:

The contingency of human intelligence, the way it shifts with health, mood, and circumstance, is at the center of Kasparov’s account of his historic duel with Deep Blue. Having beaten the machine in a celebrated match a year earlier, the champion enters the 1997 competition confident that he will again come out the victor. His confidence swells when he wins the first game decisively. But in the fateful second game, Deep Blue makes a series of strong moves, putting Kasparov on the defensive. Rattled, he makes a calamitous mental error. He resigns the game in frustration after the computer launches an aggressive and seemingly lethal attack on his queen. Only later does he realize that his position had not been hopeless; he could have forced the machine into a draw. The loss leaves Kasparov “confused and in agony,” unable to regain his emotional bearings. Though the next three games end in draws, Deep Blue crushes him in the sixth and final game to win the match.

One of Kasparov’s strengths as a champion had always been his ability to read the minds of his adversaries and hence anticipate their strategies. But with Deep Blue, there was no mind to read. The machine’s lack of personality, its implacable blankness, turned out to be one of its greatest advantages. It disoriented Kasparov, breeding doubts in his mind and eating away at his self-confidence. “I didn’t know my opponent at all,” he recalls. “This intense confusion left my mind to wander to darker places.” The irony is that the machine’s victory was as much a matter of psychology as of skill.

Read on.

Photo: Elyktra.

Should Uber’s next CEO be a robot?

A little more than two years ago, I suggested in a post that “the killer business app for artificial intelligence may turn out to be the algorithmic CEO.” I was picking up on a point that Frank Pasquale had made in a review of The Second Machine Age:

[Thiel Fellow and Ethereum developer Vitalik Buterin] has stated that automation of the top management functions at firms like Uber and AirBnB would be “trivially easy.” Automating the automators may sound like a fantasy, but it is a natural outgrowth of mantras (e.g., “maximize shareholder value”) that are commonplaces among the corporate elite.

Now that Uber CEO Travis Kalanick has resigned, completing a meltdown of the company’s top management ranks, Uber and its investors have a perfect opportunity to disrupt the executive suite, and indeed the entire history of management, by using software to run the company. Let’s face it: Kalanick’s great failing was that he was not quite robotic enough. His flaws were not analytical but human. He was a victim of his own meat.

A fundamentally numerical company, constituted mainly of software, Uber is the perfect test bed for the robot CEO. And since its staff includes exceptionally talented programmers, it already has the skill needed to gin up the algorithms necessary to do the work Kalanick and his lieutenants did (without the attendant buffoonery).* A two-day hackathon should be more than sufficient to create a robot able to translate spreadsheet data into resource-allocation plans and use machine learning to compose forward-leaning messages that inspire staffers, drivers, and venture capitalists. And to have Uber’s robot CEO sit next to Cook, Nadella, Bezos, et al., at the next White House photo-op would be a huge PR coup.

Not only is Uber the right company for a robot CEO, but now is the right time for one. Just two months ago, Alibaba CEO Jack Ma predicted that “in thirty years, a robot will likely be on the cover of Time Magazine as the best CEO.”** As the financier Martin Hutchinson pointed out, there’s no reason to wait that long. “Human CEOs have amassed an especially dire track record in the last two decades,” he wrote. “Whereas their compensation has soared far faster than overall U.S. output, productivity growth in U.S. businesses has notably lagged, indicating their failure to invest optimally.” If there were ever a job to be automated, it’s that of the underperforming, overpaid modern CEO.

Even at this year’s World Economic Forum in Davos, the case for a robot CEO was laid out in compelling terms:

There are some distinct advantages to having a robot as your company’s CEO. Firstly, they might be able to make better, more responsible, decisions. … Robots don’t face the unpredictability we humans face, so their decisions are more likely to be consistent, based on facts. … Robots can work all day, every day. They don’t need sleep, weekends or holidays. No mere humans can say the same, however hard they may try to cultivate that impression. … And if you’ve created one CEO robot, why not create a few more? It’s not as if he or she has a unique personality. Technology allows them to interact wherever your customers are, further cutting down travel costs and helping the environment.

We may look back on Kalanick’s resignation as the most transformative act of his eventful career. He has opened the door for a robot CEO. The question now is whether the Uber board will welcome the future or resist it.

_________

*On further thought, Uber’s coders probably have better things to do than write simple CEO algorithms. What’s really needed are cloud-based virtual CEOs. Yes: CEO-as-a-Service. Are you listening, Marc Benioff?

**Ma’s assumption that Time will still be around, with its cover intact, thirty years from now makes me question his futurist cred. But I’m going to assume he was speaking figuratively.

The robot paradox

“You can see the computer age everywhere but in the productivity statistics,” remarked MIT economist Robert Solow in a 1987 book review. The quip became famous. It crystallized what had come to be called the productivity paradox — the mysterious softness in industrial productivity despite years of big corporate investments in putatively labor-saving information technology.

I think the time has come to start talking about the robot paradox. So let me offer a new twist on Solow’s words:

You can see the robot age everywhere but in the labor statistics.

In an echo of the hype surrounding IT in the 1970s and 1980s, we’ve heard over the last decade a stream of predictions about how robots, algorithms, and other automation technologies are about to unleash an unemployment crisis. Not only will most factory jobs be handed over to automatons, but the ranks of white-collar workers will be decimated by artificial intelligence programs powered by Big Data. The end of work is nigh.

In the wake of the Great Recession, when hiring stayed stagnant for years, such predictions seemed reasonable. But recent economic statistics flat-out belie the claims. As Grep Ip, the Wall Street Journal economics columnist, wrote last week, predictions of an impending job apocalypse “would be more plausible if the evidence weren’t moving in exactly the opposite direction.” Business employment has been going up for 86 straight months, pushing the U.S. unemployment rate down to just 4.4 percent, a level many economists see as representing full employment. It’s true that a lot of workers have dropped out of the labor force, but the sustained, robust job growth makes it awfully hard to argue that advances in computer automation, which have been accelerating for a long time, are poised to create an unemployment explosion.

Even more telling is the persistently weak growth in productivity. As Ip explained: “If automation were rapidly displacing workers, the productivity of the remaining workers ought to be growing rapidly. Instead, growth in productivity — worker output per hour — has been dismal in almost every sector, including manufacturing.” You can argue that our methods of measuring productivity are imperfect, but if computers were going to obliterate workers, you should by now be seeing a strong upswing in productivity. And it’s just not there.

I’m convinced that computer automation is changing the way people work, often in profound ways, and I think it’s likely that automation is playing an important role in restraining wage growth by, among other things, deskilling certain occupations, shifting employees to more contingent positions, and reducing the bargaining power of workers. But the argument that computers are going to bring extreme unemployment in coming decades — an argument that was also popular in the 1950s, the 1960s, and again in the 1990s, it’s worth remembering — sounds increasingly dubious. It runs counter to the facts. Anyone making the argument today needs to provide a lucid and rational explanation of why, despite years of rapid advances in robotics, computer power, network connectivity, and artificial intelligence techniques, we have yet to see any sign of a broad loss of jobs in the economy.

Image: DARPA.