The true story of robots starting with one simple graph

Original author: Tyler Durden
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At the beginning of this year, I came across a graph that shows not only the extremely important history of robotics, but also the history of the discussion of robotics themselves. At the same time, a forecast for the development of both robotization itself and its discussion in the coming years is shown here. This is a graph of the number of rigs in operation in the United States (green line) and the number of workers in the oil industry (red line). This is an important part of the mosaic that needs to be put together before it is too late.

Studying the schedule, the first thing that catches your eye is a decrease in the number of oil rigs associated with a drop in oil prices, proportional to the number of workers employed in the oil industry. But,when the number of drilling began to increase, the number of employed workers remained at about the same level . This observation alone should be extremely interesting to all those who dispute the existence of technological unemployment. But something more important can be drawn from this graph.

Firstly, have you heard of automated rigs for drilling oil wells, or is this news for you? They are called "Iron Pombour" (assistant driller). They automate the process of screwing and unscrewing drill pipes during their immersion or ascent from the well. Admire the National Oilwell Varco AR3200 - an automated iron driller assistant.



Thanks to automatic drilling, fewer people are now required to complete this once-dangerous and very labor-intensive operation. Drill rig automation means increased productivity while fewer staff. If earlier 20 people were required to service one drilling rig, then soon 5 people will be enough . The use of new technologies in oil drilling means that out of 440,000 jobs cut during the global economic crisis, about 220,000 jobs will be lost forever .

Now again take a look at the graph and pay attention to the rate of fall. It took only TWO YEARS. Why so fast? The oil industry really does not need workers, so it got rid of them in the first place. It was possible to earn a lot of money in the oil industry, and when it flows into your pocket in an endless stream, you do not need to focus on production efficiency. Being frugal and modest is not about them. However, things change when difficult times come. And present times have become a great test even for the oil industry. One of the factors of the sharp drop in oil prices was the rivalry with another type of technological progress - hydraulic fracturing technology.

Therefore, when it was necessary to increase efficiency, the oil industry first of all reduced the number of jobs and invested in drilling automation. In the summer of 2016, oil prices reached their low of $ 30 per barrel, after which they rose slightly to $ 50 per barrel, where they stopped. This is half of the “usual” price of $ 100 per barrel, so oil companies had to double their efficiency. As a result, like the Phoenix bird, the oil industry “revived from the ashes.” Almost all previously mothballed oil rigs resumed their work, but not all workers returned to their jobs.

Sleep to the sound of an alarm


Technological unemployment has already become a fait accompli, but people continue to argue about its possible occurrence in the future. This situation is very similar to the one that has developed around climate change: disputes about it still do not subside, although we are already seeing daily manifestations of climate change. Robotization is real, people. Companies are actively investing in robotics because it means increasing production while lowering costs. This is good for business.

Salaries, salaries and other types of remuneration are all overhead costs that can be minimized by automating the production process.

But don’t worry! “All the unemployed who have lost their jobs due to robots will find better jobs elsewhere, where they pay even more.” Well, generally speaking, this is not exactly what the history of robotics in the computer age, lasting 40 years, demonstrates. Yes, some highly skilled workers have switched to higher paid jobs, but there are very few. Most people eventually find a new job that requires less skill, but less pay . That is, the labor market is steadily polarized.



Decades after decades, jobs for people with an average level of skill have been reduced in production halls and offices, and those laid off find new, less skilled jobs. Those who have lost their jobs due to robotization need to live on something, so in the end they are content with what they can get. At the same time, competition for such jobs is growing ( as long as the labor market remains chaotic ), and by agreeing to lower wages, people take on any work that they are offered in the race against cars . It also reduces the attractiveness of automation investments. As an added bonus, workstations are more productive than most new jobs. Cheaper human labor and a growing number of jobs with low productivity lead to a “paradoxical” slowdown in productivity growth . In short, the labor market for semi-skilled workers is disappearing. This is the reality that we have been observing over the past decades.

In 2017, a study was conducted , the authors of which analyzed the impact of only industrial robots on jobs from 1993 to 2007. It turned out that each new robot replaces 5.6 workers, and each additional robot by 1000 workers reduces the share of the total employed population by 0.34% and reduces wages by 0.5%. Over this 14-year period, industrial robots have quadrupled, while the number of jobs has decreased in the range from 360,000 to 670,000. As the authors note: “ It is interesting and perhaps surprising, but we did not find positive and compensating success in solving the problem of employment in any field of activity or education . ” In other words, lost jobs were not replaced by new jobs.

It is expected that the number of industrial robots will double by 2025, there will be 7 robots per 1,000 workers ( in Toledo and Detroit, already 9 robots per 1,000 workers ). Based on the research results of Acemoglu and Restropo, we can predict thatby 2025, the number of jobs will be reduced by 3.4 million , wage growth will decrease by 2.6%, and the proportion of workers among the economically active population will decrease by 1.76%. Please note that we are talking only about industrial robots, not about all robots. We do not consider software, and, of course, artificial intelligence. And the overall impact of all technologies will undoubtedly be higher.

Robotization is happening right under the nose of each of us, but people are just starting to talk about its potential dangers that we may face in the near future. For example, robotization can lead to a reduction in income for many people on the planet. In the US, it is believed that by the beginning of the 2030s there will be a reduction in all existing jobs. It’s great that they finally started discussing this problem, but most people don’t suspect that robotization has already begun. And about half of those who know about this, absurdly believe that robotization should not cause concern. On the contrary, this should be a matter of serious concern.

History tour


The most striking statistics regarding robotics is the fact that almost the entire adult population of the United States is aware of the loss of manufacturing jobs over the past thirty years. Pew Research conducted a survey among more than 4,000 U.S. residents . As a result, it turned out that 81% of respondents are aware of this fact. However, few people know that at the same time the total volume of production has increased. The United States is now producing more than ever, and only 35% of the country's adult population is aware of this fact. Only 26% of Americans know both of these facts.



Only one in four Americans knows that technology has increased production in the United States while reducing the number of employees. And the rest blame immigrants for the loss of jobs or write off everything to withdraw production abroad, although the latter is possible only with the improvement of technology. Due to the transfer abroad, we lost 13% of jobs in the manufacturing sector . This is problem. We will not be able to change anything if people are not aware of the existence of the problem, or if they think that its very existence is a matter of discussion. One cannot agree with decisions such as guaranteed unconditional basic income paid as a performance dividendif productivity growth is increasingly becoming the cause of job loss, and in discussions this is considered a future danger to our social system, and not a direct and obvious threat.

Let's think about what happens when the next recession sets in. The fall in oil prices caused a recession in the oil industry, caused massive unemployment and stimulated investment in robotics. What happens when all industries respond with massive unemployment and robotic investment? If we look at recent history, each subsequent recession has led to a constant reduction in the labor market. It seems that the peak of the labor market was passed back in 2000.



At the same time, technology reduces the cost of production more and more, so each subsequent decline again reduces the labor market and forces the business to automate low-skilled labor and reduce costs. The next recession is expected to make more than ten million people unemployed. And for the production of the required amount of products, these people are really not needed. Where 79% of able-bodied people aged 25 to 54 years worked, a decrease to 69% or lower is expected. With the current level of technology development, the economy just does not need so many workers. Well, and sprinkling salt on the wound, it should be recognized that the unemployed in the future will need more time to look for worktherefore, for those who lose their jobs in the next wave of the economic crisis, a difficult period can drag on.



Robotization divides the country more and more




To add more fuel to the fire, it must be recognized that in America, robotization has a favorable effect on liberal suburbs, while conservative rural areas suffer from its effects. According to the Daily Yonder analysis , 80% of the jobs created in 2016 were located in 51 suburbs, with a population of one million or more people. In just one year, in the suburbs, the number of jobs increased by 1.2 million . Meanwhile, in rural areas during the same time, the number of jobs decreased by 90,000 .



Today, Over 52 Million Americans Live in Economic Districts. The report of the Economic Innovation Group (EIG), a research and advocacy organization supported by both parties, clearly shows a close relationship between the number of residents of a community and their well-being. So, in districts with a population of less than 100,000 people, the likelihood of dissatisfaction with well-being is 11 times higher than in districts with a population of more than 100,000 people.

As soon as you realize that automation helps divide the US population into “red” and “blue” lines, you will immediately understand the growing polarization of American politics. This is perhaps the most dangerous effect of technological unemployment , the erosion of democracy itself, because party engagement breaks the nation, like the process of mitotic cell division into two.



New, more productive enterprises


It must be admitted that since technology allows enterprises to hire fewer workers, it is possible to achieve “full employment”, in which everyone can find a job. The laws of the economy require that either everyone work on a shorter work week, or for employing the same number of workers more enterprises are needed. If the average number of employees in a medium-sized enterprise is 10 people, then 10 enterprises will be required to provide work for 100 people. If the technology allows 1 employee to do work for 10 people, while still working for 40 hours, the average number of employees will be reduced to 1. Therefore, the number of enterprises needed to employ 100 people should increase to 100 (note: given the population growth , the number of enterprises will exceed 100).

It happens? Not. This is not happening. The opposite is happening. The number of newly created enterprises is decreasing annually, but not increasing.



But newly created enterprises increase their value every year. This is exactly what we expect from every new enterprise that uses the latest technology to produce more and at a lower cost.



Every year there are more and more new businesses worth more than $ 1 billion. Compare Tesla with Ford Motors of the early 20th century, Instagram with Kodak, or Facebook with all the pre-existing newspapers. These companies cost hundreds of billions of dollars, and their staff is much less than the most expensive companies of the past.



There is also an assumption about the limitlessness of human needs, therefore, regardless of the number of jobs reduced due to technology, unlimited consumer desires of a person will always help to create new jobs. This belief is coupled with a steady decline in the share of unforeseen expenses in total expenses . This should not surprise anyone. People cannot spend money that is not there.

The more you know ...


Now let me ask a question. Did you know everything that I talked about here, none of the above was news to you? Now ask yourself why? Robotization definitely exists and is already having an impact on the economy. So why are we still arguing about this? Perhaps the most frightening of the rigs' robot graphs, along with the rest of the graphs that I included in this article, is the fact that these data are not discussed in society . This becomes similar to the climate change problem that we have been debating for decades, while the situation is only getting worse. They also prefer to reject the problem of robotics, although its influence is becoming more and more significant.



I am afraid that the problem will be ignored further. Why do I think so? We ignored the moment of production robotization. Yes, we know that this happened, but we pretended that all employees simply switched to a new paid job, without critically evaluating the nature of this work. Is unemployment not a problem because unemployment is at a record low? Tell about this to a person who switched from a 40-hour work week with a social package and a sense of confidence in the future to three different jobs without a social package, where he works 80 hours a week, earning less and constantly fearing to lose even that.

Or tell people who feel that marriage has become the prerogative of only rich people .

Or tell people whotried to commit suicide or independently treated their depression with opiates , because the city-forming enterprise was closed in their city, destroying the local economy and leaving no means of livelihood.

Technological unemployment is real. In this situation, only one public discussion will be honest - what is the nature of the new employment. Everything speaks of a reduction in the share of employed among the economically active population , an increase in low-skilled jobs , a switch to alternative labor relations (for example, temporary work and “part-time jobs”) , an increase in the spread in monthly incomes , a reduction in benefits and compensations, and longer looking for a new job, and what can be called universal uncertainty about tomorrow , since survival , and not the "American dream," is becoming the main goal for most Americans.

At the same time, some Americans are doing well. Why? Because they own cars. They have lobbyists. They write laws. They write a tax code. They have power. Now they are the only beneficiaries of machine labor, producing more and more national wealth, and once this wealth was distributed among a wider circle of people.



Hundreds of thousands of jobs were simply lost due to the automation of oil rigs, and no one (except those who lost their jobs and their families) did not even blink an eye. Over the years, in connection with the use of industrial robots, hundreds of thousands of jobs have been reduced.

Hundreds of thousands of jobs were cut this year in the retail industry due to Amazon's unstoppable performance using over 100,000 robots. In fairness, it is worth noting that Amazon also creates many new jobs, but for every newly created workplace there are two or more reduced ones, because the company removes the least efficient bricks or uncompetitive links. All talk about employment will be dishonest, unless it comes to creating online jobs or the details of their creation.

The question is, at what point will enough people understand that robotization is a very real problem that needs to be dealt with immediately. When will millions of jobs in trucking be automated ? Or when millions of retail jobs are being automated? How many people need to be reduced before our collective desire to do something is ripe? And at what point do we realize thatthe problem of robotization should not be a problem at all , that we just want to automate the work as much as possible ? When will we understand that robotization is a blessing, not a curse? That the benefits of machine labor should extend to the whole of society, and not be concentrated in the hands of a relatively small group of people, especially considering that all the technology has arisen from taxpayer-funded research and development and represents the technological heritage of our ancestors, who transmitted their knowledge to us through generations . When do the only beneficiaries of this heritage realize that, despite their interest in job cuts , do they still need clients?

I hope this time comes soon. Very soon, because, looking back at our reality, the question arises: is it too late to act, maybe we are late? As long as we force each other to work for money in order to live, robotization will work against us.
The priority task of our civilization should be the rejection of the linking of income to work , which will create economic freedom for everyone. Without an unconditional basic income, the future is very bleak. With unconditional basic income growing as productivity grows, as a fair share of an increasingly robotic economy , the future will finally become a favorable place for humanity .

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