Richard Baldwin on the “inhumanely fast” next phase of globalization

https://qz.com/1642691/richard-baldwin-on-the-inhumanely-fast-next-phase-of-globalization/

by smb111 • 7 years ago

110 132 7 years ago

ZhuanXia3• 7 years ago

I remember reading Average is Over and A Fairwell to Alms just when I first started working. They convinced me that labour power was going to decline precipitously. I stared saving 60+% of everything I made and putting it into index funds. Anyone making a good salary should attempt the same. Much of white collar work is extremely amenable to automation, much more than even truck driving:https://en.m.wikipedia.org/wiki/Moravec%27s_paradox

Maybe comparative advantage will save the day, but I think it is a really good idea to start accumulating capital, even at today’s valuations.

wrong_variable2• 7 years ago

If a large amount of white collar workers are jobless, your SPY calls would also become worthless.

It's a good idea to invest in index funds, but investing in index funds expecting a economic apocalypse is not good reasoning.

JPLeRouzic• 7 years ago

Do you have any suggestion as to what would be a good investment? Thanks!

jiveturkey• 7 years ago

I'm sure the idea is to convert to cash before the apocalypse actually occurs. Even if one misses it by a little (ie, there is some downturn), the bulk of GP's earnings have gone to savings.

ZhuanXia3• 7 years ago

My model is that as median labour power decreases capital and superstars should capture a larger percentage of future productivity increases. And automation should provide huge productivity increases. This seems compatible with index funds being a good bet.

Perhaps I am wrong, but could you provide details as to why?

walshemj• 7 years ago

Most of the entry level white collar jobs that can be automated have been.

Those that remain would require some major and I mean order of magnitudes improvements in AI.

Can you give me some examples of white collar jobs that you think can be automated?

bastawhiz2• 7 years ago

I worked at a large tech company that had an enormous finance department. They did everything in Excel. Our job was to automate their work. The tools we built were routinely more accurate and faster than the finance people were.

When our work was less accurate, it was because the input was bad. The input came from the finance team. The only reason they didn't disappear entirely was because they'd convinced management that there were things that the software couldn't do that only humans could futz with. The one or two percentage points their adjustments improved their results by were easily outpaced by the overall improved accuracy of the machines.

ww5202• 7 years ago

Saving and investing are good in general. Having a fuckyou fund helps your career as well. You can take on more risk and be more assertive at job.

ryanmarsh4• 7 years ago

Being a consultant with clients in a wide range of industries I concur. Most of the employees I come into contact with have jobs that could be automated with a few days or weeks of programmer effort. They are one successful software project from losing their jobs. Lucky for them their companies are terrible at shipping software.

Conversely, automating the work of a plumber would require a massive investment in AI and robotics.

Also, nobody makes a robot that can be trusted to repaint the trim in my house unattended.

maxxxxx4• 7 years ago

"Most of the employees I come into contact with have jobs that could be automated with a few days or weeks of programmer effort."

After looking at some of the business processes at my company I am not so sure about this anymore. There are a lot of jobs that are pretty mundane but when you look a little closer most of the processes have a lot of exceptions where the employee makes decisions that don't follow the process exactly. From what I have seen it's really hard to come up with a recipe that can be 100% automated because of all these exceptions. It seems to me that humans are a buffer that sometimes corrects unforeseen things and without that buffer the organization would do stupid things.

pault4• 7 years ago

They are one successful software project from losing their jobs.

Maybe. However, consider how successful Google has been at automating customer service.

vorg• 7 years ago

jobs that could be automated with a few days or weeks of programmer effort

Governments don't want the workers in their countries to not have a job, even when there's plenty of wealth to go around. Such people will actively demonstrate against all sorts of abuse by government employees and property owners, and even cause socialist revolutions at home and create terror abroad.

Even better for governments are when the workers in the country have heavily mortgaged houses and children with medical expenses. That's the main reason for BS jobs, high house prices, and fast food.

ihm• 7 years ago

I think it is a really good idea to start accumulating capital, even at today’s valuations.

This is an interesting take. The alternative to individually trying to each become capitalists, is grouping together and making sure we all have access to the proceeds of automation.

influx• 7 years ago

Becoming a capitalist has a long history of being successful. The other way not as much.

invalidOrTaken• 7 years ago

I think saving is an essential part of it, but not the whole story.

I recently took a job at a university. I had a bit of leverage (extensive clojure experience ftw), and I spent it on negotiating for 20 hrs/week. This gives me much more time to do "the other stuff" that's part of a career---networking, learning, interviewing, starting soon-to-be-aborted businesses. I've also been trying (with a group of friends) to figure out if there's any way we can make some sort of co-op work.

I do think "jobs are over," at least as we know them for the middle class, but I don't think that needs to mean that the middle class is over. What form it will take, though, I'm still not sure. I suspect things will keep getting weirder.

Creationer• 7 years ago

The problem is that jobs are over, but we are still taxed the old fashioned way - mostly to pay for the healthcare and pensions of baby boomers who had steady careers and cheap housing.

Healthcare and pensions make up 66% of the US Federal Budget. Its a similiar case in most other Western countries. If we could somehow find a way to relieve ourselves of that burden, taxes on labour could be much lower and life significantly better.

I think this is partly why we've seen such a huge boom in freelancing. Its much easier to optimise your taxes that way, instead of working for a company.

iamnothere• 7 years ago

Just make sure you diversify. Quality land, managed rental units, and other assets will still hold some value even if stocks and bonds take a massive hit. Regardless of the state of the economy, people still have to live somewhere.

astrange2• 7 years ago

Not if they read Henry George and realize there's no reason to assign you the land value.

woodandsteel• 7 years ago

That's individually a smart move, collectively a dumb one. That strategy won't work for most people. Even the successful white collar workers, especially the ones who are married with children, are financially stressed already and can't save much.

You know, if 5% of the workforce follows that strategy, but things go to hell for 50% because of these trends, then we will have rioting in the streets, maybe a revolution with a nasty government installed, that is what history shows usually happens. And then the new government will go after the successful people like you.

Some problems can be dealt with only through responsible collective action.

ilaksh• 7 years ago

True but hasn't it always been a pretty obvious goal to accumulate capital?

crazygringo5• 7 years ago

Q: Several studies show technology will disrupt jobs, but they also argue that almost as many jobs will be created.
A: There’s a mismatch of job displacement and job creation. Job displacement is being driven at the speed of digital technology, which is explosive at this moment. And displacement is the business model for the AI geniuses and all those companies. All of them are hoping to get rich by displacing workers, not by creating jobs. Creating jobs is much slower. So, at least in the next few years, the displacement will outstrip the creation. But it’s not the direction of travel which is wrong. It’s just a mismatch of speed.

Citation needed. There's zero evidence that "creating jobs is slower." People have been saying this every year for well over a century, and yet unemployment is quite low right now in the US.

It's one of those things that seems logical -- but all evidence is to the contrary. And it's probably because it's a lot easier for the human brain to spot a huge loss of jobs in one industry, than a small increase across many industries that adds up to the same size.

Also, the jobs can already exist but just not be filled. We don't necessarily need to wait for them to be "created".

nosianu• 7 years ago

Okay... so now also include in your statement the quality of those new jobs. Not how many electronic gadgets people can buy compared to 50 years ago, but how stressed they are and how they fit into greater society. Also include how useful many jobs feel to those working in them - reference to "Dilbert jobs" (or Wally jobs, if you like and how common the feeling seems to be that ones job is useless (I myself certainly had quite a few high-paying (IT) freelancer jobs - the ones where you would expect more rigour before the position is created - where I had clear evidence that the job was completely useless, but it's hard to decline 6-figure income for half a year when society punishes you if you do that).

I don't see the point in making an argument when it's only based on "there is a(ny) job". Here where I live now the bureaucrats can trim the number of jobless by putting them into temporary and mostly useless training programs. Useless according not to me but to any analysis ever published in (the major) news media in my country. Also, the number of people working for worker-lease companies instead of being "direct employees" has increased may times over the last two decades. Part of making the workforce "more flexible". Now they have less pay, are sent around the country much more often and can't establish themselves in one place (or have a family life where they are away all week and have stressful weekend travel to and from the places of work) - but sure, "flexibility" is up. It does not matter if the families those people create will have much less happy kids - as long as the total numbers still look alright. Right?If you "migrate" a job from a stable decades-long factory job to being an Uber driver, 1 == 1 so it's all the same on the bottom line?

perfunctory• 7 years ago

A while ago I created a poll about BS jobs which unfortunately didn't attract much attention. With N=8, most HNers have bullshit jobs.

https://news.ycombinator.com/item?id=17880159

rjf72• 7 years ago

Contrary to intuition, the average number of hours people work has completely plummeted as well. It's down more than 250 hours a year since the 1950s. [1] At a 40 hour work week that means we now take a bit more than an extra 1.5 months off per year, compared to then. And on topics on forums such as these when you get into physical jobs such as, e.g. plumbers, people bemoan the physical exertion of these jobs and claim the workers are destroying their bodies. OK. Now let's go back to those 'less stressful times.' In the fifties you were looking 7 injuries per 100 workers, and a nation wide average of around 15,000 on-the-job deaths a year. [2] The total workforce back then was only about 62 million. That's 1 in every ~4,100 workers being killed on the job per year. Part of the reason for the rise of occupational safety rules is that so many people were dying on the job that it was hurting the economy!

And this is without even getting into the political differences of the times. In the 1950s people were still just getting over a world war that killed 3% of the entire world's population (imagine 231 million people dying today, to give that seemingly small number the scale it deserves) and brought entire cities to rubble. And this against an extremely capable enemy with genocidal aims, who nearly won. And without missing a beat we then entered into the cold war where everybody woke up realizing that there was a very real chance that their life could end on this day due to imminent nuclear war. Not some abstract 'doomsday clock' nonsense, but literally both sides actively positioning and aiming their nukes at one another ready to go off at a moment's notice - something that genuinely nearly happened multiple times, children practicing drills against nuclear disaster, and regular families building nuclear survival bunkers.

Today we live in a bit of a paradox. Relative to most any time in the past, we live better than ever. Yet people are less satisfied than ever. And I think there's a simple reason. Imagine Star Trek. What would really happen if we had e.g. holodecks? You can do anything, anybody, become anything, anybody, etc. And you would never need, or want, for anything. You would have no conflict, no animosity, and no hope for change since you already have everything. Want to know what the Great Filter of the Fermi Paradox is? Comfort. This would destroy absolutely all meaning in life for most people. People need to want. It provides a clean explanation to so many things. This issue we're discussing, upper class young adults on twitter tirelessly spending their days trying to find things to be offended about - or failing that taking offense on behalf of people they know nothing about, billionaires who continue to work 12 hour days to expand their wealth to no real point, and so on.

[1] https://alfred.stlouisfed.org/series?seid=AVHWPEUSA065NRUG

[2] https://www.ehstoday.com/safety/management/good_times_toll

crazygringo5• 7 years ago

Sorry, but you should look at what jobs used to be like.

Back-breaking work on the farm. Mind-numbing and body-destroying assembly line work that could cut off your hand. Construction work without any of the safety standards we now have. Alcohol consumption and tobacco smoking was sky-high.

Any way you slice it, the quality of jobs today is tremendously higher than in the past, and people are not being paid less.

True, job tenure is no longer as long-term as it used to be, and probably doesn't come with a pension, but the flip side is that it's also never been easier to find a job and leave a bad one, and you can manage your own 401(k) that won't disappear if your employer goes bankrupt.

wavefunction4• 7 years ago

It seems like the people studying this stuff disagree with your opinion: https://www.brookings.edu/blog/the-avenue/2019/02/25/automat...

andrenth8• 7 years ago

Automation has been in use in the auto industry for decades, and yet it employs much more people than it did before automation was widespread.

reallydude2• 7 years ago

There's zero evidence that "creating jobs is slower."

Opportunity for innovation in the market is far less than opportunity for innovation (ie automation) in business processes.

Given a hypothetical business equilibrium (business growth has stabilized or slowed to a small linear function) I have 2 employees. 1 employee writes a program to automate the other employee's job. Now I have 1 employees.

In order for me to have another employee, I have to have a new product and/or process or a whole new business.

I have personally automated people out of a job. Like, they got fired and never replaced. Maybe 5 in my career.

crazygringo5• 7 years ago

Job creation doesn't require that much innovation in the market. It just requires demand.

People want better coffee and pastries, suddenly there are hundreds of thousands of jobs for baristas, bakers and managers.

People grow older and need care, suddenly the number of employees in home care expands drastically.

And so on. Maybe for you to need another employee you need a new product/process/business... but most business are just trying to meet existing demand in simple small ways.

cco• 7 years ago

Employment rate is fairly useless unless you really have a burning desire to know how many people are participating in work. Instead look towards bankruptcy rates, savings rates, etc for a better measure of how our economy is serving it's constituents.

By those sorts of measures we aren't doing great over the last 30 years.

phkahler2• 7 years ago

Automation eliminates jobs. Period. There is a need for people to build and maintain the automation systems, but those jobs typically pay more. Whomever is paying the higher value person would not be doing so if it wasn't a net savings, so we can rightly conclude that it takes fewer people overall even if the pay were the same. But it's not, so even fewer jobs. You may say that the automation frees up people to do other things - latent unmet demand. But if those opportunities were already present, they must have been inferior from the employee point of view or people would have switched already.

crazygringo5• 7 years ago

So by your logic, 99% of existing jobs are inferior to being a farmer?

Obviously not. You're completely ignoring that entirely new job categories are being created every year, and that the attractiveness of a job depends on many things which can constantly change, including salary, working conditions, geography, hours, etc.

astrange2• 7 years ago

"Automation eliminates jobs" comes from people misreading studies on computer manufacturing. One manufacturing employee produces much more computer than they did in 1970 - does this mean the other workers were automated away? No, it means computers got thousands of times cheaper for the same product.

The US employment rate is the highest it's been in 50 years.

jedharris• 7 years ago

Where are the Unicorns that are showing explosive growth by creating huge numbers of jobs? All the ones I can find are either reducing jobs or just switching them to lower pay / less reliable “gigs”.

More generally, claims that just as many jobs are being created need evidence. I can easily provide evidence of jobs being eliminated, in the absence of evidence for job creation the conclusion is obvious.

hugh4life• 7 years ago

The next phase of globalization is the devaluation of fossil fuels and agriculture commodities making whole countries economies untenable leading towards mass migration far more extreme than the recent past...

turk73• 7 years ago

Not buying it, sorry. Maybe some jobs, but all this nonsense about automation taking over everything is purely to sow FUD and for no other reason.

Oh, automatic trucks, yeah, probably not. That's going to be really hard to pull off because the first time one of those trucks crushes and kills a toddler, the liability is going to rise tremendously. Same with drones--the first one that crashes into a house and causes a fire that kills a whole family is going to force them to reconsider their idiotic plans. It doesn't matter how you design the things because the tech isn't what is important.

As far as replacing the software engineering work I do with "freelancers" is a sure way to put my whole company out of business. If there were any freelancers out there who could assist us we would have already hired them. We don't want "freelancers" we want people who will be around to build up institutional knowledge and perform because they know our company and our data. As it is, our office in India is about 30% as efficient as the one on the US, and that whole experiment has already been running for almost two decades. It's not just the timezones, it's just the whole nature of the job. We have people with 15-20 years of experience working with us. It's just too naive a picture to say "globotics" which is just a made up word--even says so in the article. If you want good outcomes in a corporation, it would be wise to hire good people and not just stock up on human cattle.

HillaryBriss3• 7 years ago

the first time one of those trucks crushes and kills a toddler, the liability is going to rise tremendously

Human driven trucks kill people now and have done so for decades. IMHO, the liability comparison that will matter, the one that regulators, insurance companies, the courts and the market will eventually embrace will instead be: are automatic trucks as safe or just a little bit safer than human driven trucks?

maxxxxx4• 7 years ago

It's not that easy. The whole legal system is based on finding the party to blame. With human drivers it's the driver or maybe the company but if something with an automated truck happens who do you blame? I am sure companies would love to be able to hide behind an automated system.

maxxxxx4• 7 years ago

"As far as replacing the software engineering work I do with "freelancers" is a sure way to put my whole company out of business. If there were any freelancers out there who could assist us we would have already hired them. We don't want "freelancers" we want people who will be around to build up institutional knowledge and perform because they know our company and our data. As it is, our office in India is about 30% as efficient as the one on the US, and that whole experiment has already been running for almost two decades. It's not just the timezones, it's just the whole nature of the job. We have people with 15-20 years of experience working with us. It's just too naive a picture to say "globotics" which is just a made up word--even says so in the article. If you want good outcomes in a corporation, it would be wise to hire good people and not just stock up on human cattle. "

You can see this at the IT department in my company. They are totally outsourced and offshored and it shows that they are not capable of doing anything moderately complex because every time they start something that start from 0. They have almost no people with any institutional memory so before they start something they have to spend an insane amount of time learning the current environment. If they had people who have experience from past projects they could do things in a fraction of time. But I guess the short term benefit of firing expensive experienced workers is easier to justify than the long term benefit of keeping them.

jodrellblank2• 7 years ago

Self-driving cars have already killed people, that hasn't stopped them yet. Poorly made products have killed and burned houses down, and people still make/sell/buy things. Aircraft have crashed killing more than one family, and air travel is still a thing. Rockets have exploded, and people still want to be astronauts. Ships have sunk and people still travel on ships. Bridges have collapsed and people drive over bridges, restaurants and country clubs have burned down and people still attend them, tower blocks have burned or collapsed and people still live in them. Smokers have died and people still smoke.

One drone burning a house - just won't have the effect you suggest, or the world would look very different right now.

jessriedel2• 7 years ago

Given that the global poor gaining jobs are statistically much worse off than those losing them, I'd say it's inhumanely slow...

crazygringo5• 7 years ago

That's just factually untrue.

First-world workers aren't losing jobs in aggregate at all. They're not statistically worse off at all. (Unfortunately median income hasn't been improving, but it certainly hasn't been getting meaningfully worse.)

While the global poor are experiencing massive benefits lifting them out of poverty.

I fail to see what is inhumane here.

jessriedel2• 7 years ago

You misinterpret. I'm not claiming that the effect of globalization is making the global poor worse off than they were before, or the first-world workers better off than they were before. I am saying the global poor are starting much worse off and, even after benefiting from globalization, remaining worse off than first-world workers.

dfilppi• 7 years ago

Jobs are an undesirable side effect of a business, not the goal. With or without globalism, that is and always will be true.

magpi3• 7 years ago

Maybe to the business. But jobs are a very desirable side effect for the nation state that makes the laws that make a business possible.

ww5202• 7 years ago

Haven't Mechanical Turks been there for a while? I wonder how much impact it has had on the white collar work force.

jotm• 7 years ago

I used it for a while... Found it really sad what some people in the US will do for 50 cents (~20min of work)...

hnnnnnnngggggg• 7 years ago

I think what many authors/technologists like Mr. Baldwin overlook are the impacts of Data Privacy and Locality laws will have on automation efforts described in this article.

HillaryBriss3• 7 years ago

By trying to be more flexible with work, you thought you were getting control of your life. You could come home and take care of the kids while handling a few emails. But you actually arranged it so you ended up out of work because a telemigrant took your job for much less.

I keep thinking about the age-old discussion about why the tech industry doesn't just move away from Silicon Valley to a location with a low cost of living. And the answer usually involves the existence of a critical mass of highly effective potential employees, of a cluster economy. There really are some jobs whose pay rates do not matter. But not all that many. All the rest will sooner or later be vulnerable to global outsourcing/telemigration.

Animats• 7 years ago

This guy is straining to get his new words to become memes.

"Globotics". "Telemigration". Please. Companies have been outsourcing call centers to India for decades now. That trend seems to have peaked; outside of telemarketing, the lower cost isn't worth the lower performance.

duality• 7 years ago

I stopped reading when he said IBM Watson was somehow key in this "globotics" revolution. Even IBM seems to have stopped advertising Watson.

orev• 7 years ago

Given where Watson is now, the fact that systems mostly only get better, and all the other advances in AI, I think it’s safe to say that it will get better. He could also be using Waston as a general example of AI that might be relevant to a wider audience.

Balgair• 7 years ago

Watson is, essentially, just the code name for their consulting services.

notfromhere• 7 years ago

Watson isn't a thing, it's just fancy words for their army of low-paid consultants. I worked for a competitor and everyone largely decided Watson wasn't anything to worry about.

balt_s• 7 years ago

Globalization always means more opportunities for the nation’s most competitive citizens, but more competition for the least competitive citizens. The trouble is that in the services sector there are a lot of uncompetitive people.

This will end well.

TACIXAT• 7 years ago

I'm curious how long the world will take to normalize all nations. China cannot be the world's factory forever. China seems to be setting Africa up for a similar position as it rises. What happens when we run out of poorer countries to make stuff? Do we bring that home? Prices will surely need to go up in the case of domestic labor. I'm super curious how this will unfold.

thrwayxyz2• 7 years ago

The people most worried about AI are the ones not working on it. We don't know how to initialise a simple feed forward neural network yet let alone train it efficiently. It will be centuries before the theory catches up with the proctice. Until then we might as well be monks cross pollinating plants worried about genetic modification.

JoeAltmaier• 7 years ago

Likely gross pessimism. We went from clockwork to million-transitor computers in the last 100 years (most of that in the last 25). How long before we hit a billion? A trillion? How long before we hit on the same trick nature blindly hit upon, to initialize her neural networks?

thrwayxyz2• 7 years ago

It doesn't matter how deep a hole you did. You won't strike oil if you're digging at the wrong place.

jodrellblank2• 7 years ago

We hit a billion transistors in a CPU in about 2010, ten billion in 2015, and now some pass twenty-three billion.

In GPUs, a billion transistors in 2009, twenty-one billion in 2017.

In FGPAs, a billion in 2004 and fifty billion in 2018.

https://en.wikipedia.org/wiki/Transistor_count

roca• 7 years ago

My problem with this take is that people --- including me! --- have been predicting this for decades because the logic just seems so clear, yet unemployment is still low and long-term real wages have not declined, in fact around the world and in most wealth bands they have risen dramatically.

I don't think there's some benevolent cosmic law that ensures job creation will always match job destruction, so I can't assume these dire predictions will never come true. But after so many years crying wolf it's hard to take them seriously until macroeconomic indicators show they're happening.

AstralStorm4• 7 years ago

We're getting some signs of sigmoid in both USA and Norway, already there in Japan.

The grand total is being pumped by China, India, Eastern Europe playing catch up, with places like South Korea having almost reached it.

nostrademons2• 7 years ago

People usually underestimate the capacity of the population to adapt. The changes described here have been operating for decades. Motivated, mentally-healthy people with strong community support can usually enter a new career in 2-4 years. You get a recession and lots of angsting as people mentally accept the new reality, and then they get jobs within that new reality (which just gets destroyed again in another 10-15 years).

When people haven't been able to adapt, results are every bit as tragic as people predicted. Think of the large swaths of Appalachia or the Midwest that are still smarting from our transition away from a coal & steel economy.

Ericson2314• 7 years ago

It's looking more like work is becoming pointless but society still makes us do it. I would hope UBI speeds up automation.

In particular AI sucks, but virtually integrated expert systems don't. Too bad they have a hard time emerging under capitalism. Because your supply chain is always insanely stupid mega rent seekers.

Maybe some aquiponics megaco-op can ensure its automation engineers don't starve, which will be to socialism what the loom was to industrial capitalism. Get on it Mondragon.

m0llusk• 7 years ago

Jobs are essentially slavery and ditching them should be good for everyone. All we need to do is build a society that meets the basic needs of the population. We already have some tools and ideas to experiment with. Mourning the old order won't bring it back or delay change, only complicate this transition.

Richard Baldwin on the “inhumanely fast” next phase of globalization

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