Will Robots Eat Our Jobs?

“I’m sorry Dave. I’m afraid I can’t do that.”

HAL 9000 Interface. Illustration Grafiker61. Source: Wikipedia

That’s what the HAL 9000 computer says to Dr. David Bowman when he tells HAL to “Open the pod-bay door.” HAL had gone rogue and Bowman was in an EVA pod outside the spacecraft.

And that’s what a lot of people are worried about in our current robotic revolution. Robots have replaced workers in a whole host of industries, especially in manufacturing. Look at the way factories are depicted in movies from the ‘80s: they seem almost quaint in the way they depict a factory floor, with installations and product finishing being done by hand. Robots have been taking over a lot of repetitive manual labor for a long time.

But now software and mobile technology is proposing to automate what used to be safe, middle-class service jobs. Robo-advisors are impacting the investment management industry; write-bots now author company press-releases; driverless cars and on-demand ride-sharing threaten to upend the taxicab industry. Already, the value of taxi medallions in New York City has fallen by almost 50%.

Taxi medallion prices. Source: AEI

But should we be alarmed by the rise of the machines? Are we nearing some sort-of 2001-like outcome, where AI and automation take over? Alarmism is counterproductive. There’s no shortage of work that can be done only by people right now – work that involves planning, problem-solving, creativity, leadership, and teamwork. And computers are far more likely to aid, rather than take over, those tasks.

An analogy can be seen in modern chess. For decades people were obsessed with whether a computer program could beat a grand master. In 1997 world champion Gary Kasparov lost to IBM’s program Deep Blue in a highly publicized match-up. But Kasparov went on to invent “Advanced Chess,” in which humans and computers cooperate rather than compete. In an Advanced Chess game, the humans are in charge during the entire match and are free to play any move, but the competitors get analysis and suggestions from fast PCs of equal hardware strength. Advanced Chess players can typically beat both grandmasters and computer programs, because they optimize what humans and computers do best.

In the same way, people and machines can cooperate and be more productive than either human labor or automated machines could be working alone. Komatsu and Scania are making driverless trucks to transport rubble in open-pit mines, overseen by a control center that manages a fleet. The controllers are far more productive and in safer work environments than truck operators used to be.

Source: Komatsu

Transitions matter, and the factories of the late 19th century gave rise to populism and revolutions in the early 20th century. But HAL isn’t taking over our spaceship – at least, not yet. All the blacksmithing jobs that were lost when cars came onto the landscape were more than replaced by car-makers and auto repair shops. The marketplace can sort this out, if it’s allowed to. The important thing to remember about artificial intelligence is that it’s artificial. Real productivity growth requires creativity. And that’s the most human thing about us.

Douglas R. Tengdin, CFA

By | 2017-07-17T12:21:29+00:00 February 9th, 2017|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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