The Green Light / 207 CopyrightedMaterial–Paperback/Kindle available @ Amazon prosperity.Thisiswhycapitalismhassucceeded,andoth- ereconomicsystemshavefailed. In time, I thinkit is likely that our perceptions will shift so that we begin to truly recognize the economic contribution that our individual marketplace decisions make. Someday,the majority of peoplewill bevaluedin economic terms not for what they directly produce, but fortheirparticipationinconsumptionmarkets.Ifwecan succeed in gradually extending that participation to the billions ofpeoplewhoarenow trappedinpoverty—and do so in a way that creates incentives to conserve re- sources and minimize environmental impact—we may findthattheresultingconsumerdemandiscapableoffu- eling an engine that can drive us to unprecedented eco- nomicheights. The Green Light The natural cycle in the tunnel is stable and reinforcing. The vast majority of the consumers in the tunnel now glowwithapredominantlygreenlight.Astimepasses,the collectiveintensityofthelightscontinuestograduallyin- crease. Suddenly, we see that vast numbers of dim green lights have begun to stream into the tunnel. These new lights have barely enough intensity to make it past the threshold,butonceinside,theyjointheriveroflightsasit courses overthe panels onthe tunnelwalls. At first, we sensethatthebusinessesinthetunnelarestrainingsome- what to meet this new demand, but as time passes, the cycleagainstrengthens.Thecollectiveintensityofthelight THE LIGHTS IN THE TUNNEL / 208 CopyrightedMaterial–Paperback/Kindle available @ Amazon in the tunnel begins to quickly increase. We also notice that,overtime,eachofthenewdimlightsisverygradually becomingbrighter. As the newlightsstream into thetunneland arein- corporatedintoitsnaturalcycle,weseethatsomebright white lightsbegintopulse withnewenergy.New panels arenowappearinginmanyplacesonthetunnelwallsthat wereoncedark.Theentrepreneursandbusinessownersin the tunnel are responding to the rapidly increasing de- mand. As the number of lights continues to increase, the speed with which panelsareupdatedand thenumber of newpanelsappearingonthetunnelwallsseemstoaccele- rate. Although we had perceived the tunnel as being al- mostinfinitelyvast,itnowappearsthatthewallsarecom- pletelycoveredwithpanels. Evenaswesensethis,however,thetunnelitselfbe- ginstoexpand.Asnewpanelsrapidlyfillthespacesonthe expandingtunnelwalls,wenoticethatsomeofthebrigh- testwhitelightsarenowradiatingwithanunprecedented intensity.Still,astheever-increasingcycleoflightcontin- ues to parade through the expanding tunnel, we sense stronglythatitisthe seeminglyinfinite number ofgreen lights thattrulyencapsulates the collective energy, enter- priseandhopeofallhumanbeings.   CopyrightedMaterial– Paperback/Kindle available @ Amazon APPENDIX / FINAL THOUGHTS    AretheideaspresentedinthisbookWRONG?  (Opposingargumentsandmyresponses)….   Page 210  TwoQuestionsWorthThinkingAbout……  Page 223  Wherearewenow?F ourPossibleCases……  Page 224  TheNext10-20years:SomeIndicatorsto WatchFor.……………………………………   Page 227  OutsmartingMarx……………………………  Page 237  TheTechnologyPara dox……………………  Page 239  MachineIntelligenceandtheTuringTest…….  Page 241    THE LIGHTS IN THE TUNNEL / 210 CopyrightedMaterial–Paperback/Kindle available @ Amazon Are the ideas presented in this book WRONG? (Opposing arguments with responses)  In this section I have listed some of the arguments that maybemadeagainsttheideasinthisbook,togetherwith myresponses.Theseareeitherconventionalargumentsor thingsIhavethoughtoforseenelsewhere.  The economy will always create new jobs; we will never have structural unemployment as a result of ad- vancing technology Thisistheideabehindthe“Ludditefallacy”whichIdis- cussedatsomelengthinChapters2and3(seepages95 and 131). At present, I suspect that most economists wouldprobablybelikelytoagreewiththisstatementand, therefore, disagree with what I have suggested in this book.Here,inanutshell,ismyargumentforwhyIthink wewillendupwithaseriousunemploymentproblem: Astechnologyadvancesandindustriesautomate,this improvestheefficiencyofproductionandtendstomake the products and services produced by those industries more affordable. That leaves more purchasing power in thepocketsofconsumers.Thoseconsumersthengoout andspendthatextramoneyonallkindsofproductsand servicesproducedbyavarietyofindustries.Someofthose industries are relatively labor intensive, so they have to hire more workers to meet this demand—andso overall employmentremainsstableorincreases.Thisisthereason Appendix / Final Thoughts / 211 CopyrightedMaterial–Paperback/Kindle available @ Amazon that, historically, technology has not led to sustained, widespreadunemployment. Myargumentisthatacceleratingautomationtechnol- ogywillultimatelyinvademanyoftheindustriesthathave traditionallybeenlaborintensive.Additionally,theprocess of creative destruction will destroy old industries and createnewones,andveryfewofthesenewindustriesare likelytobelaborintensive.Asaresult,theoverallecono- mywillbecomelesslaborintensiveandultimatelyreacha “tipping point.” Beyondthis point, the economy will no longerbeabletoabsorbtheworkerswholosejobsdueto automation: businesses will instead invest primarily in moremachines.Ihavealsoarguedthatthisprocesswillbe relentless,andifitisnotaddressedbysometypeofgov- ernmentpolicy,wemayultimatelyseeaprecipitousdrop inconsumerspendingasasubstantialfractionofthepop- ulation loses confidence in its future income continuity. That,ofcourse,wouldresultinevenmoreunemployment andadownwardspiralwouldensue.      THE LIGHTS IN THE TUNNEL / 212 CopyrightedMaterial–Paperback/Kindle available @ Amazon If technology resulted in unemployment, everyone would already be out of a job because technological progress has been going on for hundreds of years Thisreallyjustamountstosaying“ithasn’thappenedyet, so it will never happen.” History has proven time and againthat,wheretechnologyisconcerned,somethingcan beimpossiblesincethedawnofcivilizationandthensud- denly, in the blink of an eye, become possible.Revolutio- narytechnologies,suchastheairplaneandnuclearpower, wherealldismissedas being impossible evenbypreemi- nentscientistswhowereinvolvedintheresearchthatled totheirdevelopment. Today,mostofusacceptthattechnologywillcontin- uetoadvanceandproducethingsthatwemightcurrently viewasimpossible.However,westillthinktoonarrowly. Weacceptthattherewillbenewtechnologies,newprod- uctsandnewindustries,butmostofusarenotprepared toacceptthatallthiswillchangethebasiceconomicrules that we take for granted. But why wouldn’t that be the case?Isthereafundamentalreasonwhyacceleratingtech- nologyshouldimpactnearlyeveryaspectofourlives—but notimpactthewaytheeconomyworks?AsIpointedout inChapter2,advancinginformationtechnology—because itenabledthecreationanddistributionoffinancialderiva- tives—hascertainlyplayedanimportantroleintheseveri- tyofthecurrenteconomiccrisis.Isuspectthatthisisjust a preview of the economic impacts that technology will haveinthefuture. Appendix / Final Thoughts / 213 CopyrightedMaterial–Paperback/Kindle available @ Amazon The population is aging. Once the baby boomers re- tire, we will have a worker shortage not unemploy- ment Innearlyallthedevelopednations(andalsoinChina),the populationsarerapidlyagingandretirementplansarepro- jected tocome under intensepressure,astoofewyoung workers have to support too many older retired people. Doesthisimplythatthereislikelytobeanoverallshort- ageofworkersaslargenumbersofolderpeopleleavethe workforce? I think it is certainly possible this may be a counteractive force that might tend to delay the impact fromautomationtoacertainextent.Herearesomethings toconsider:   Theimpactofautomationonaspecificjobcategoryis reallynotrelatedtothenumberofworkersavailableto perform that type of job. Once technology advances tothepointwhereatypeofjobcanbeautomated,the machinestodothiscaneasilybereplicated.Machines donotneedtobeeducatedortrained,andsotheyare notsubjecttothebottlenecksthatcreateshortagesof workersinfieldssuchasnursing.Therefore,inconsi- deringtheoverallimpactofmachineautomation,the important criterion is not the number of workers availablebut thetypes of jobsthat canbe automated. Totheextentthatthereareworkershortageswithina specific job category, that would actually tend to in- creasetheincentiveforautomationtechnologiestobe developedinthatarea.WealreadyseethiseffectinJa- panwheresignificantworkisbeingtodonetodevelop THE LIGHTS IN THE TUNNEL / 214 CopyrightedMaterial–Paperback/Kindle available @ Amazon robots capable of assisting with care of the elderly population.  Thecurrentconsensusviewseemstobethat,asare- sult of the 2008-9 financial crisis (and its impact on 401k plans), many workers will remain in the work- forcelongerthanoriginallyplanned.Thiswillgiveau- tomationtechnologylongertocomeintoplaybefore anyworkershortagesmaterialize.  Eveniftheaging populationdoestendtoretardun- employment,thiswould,ofcourse,simplybeadelay- ingfactor—notalong-termsolutiontotheproblem.  Ithinkwecancertainlyexpecttoseeworkershortag- esinsomeareas,butthismayverypossiblybecombined withanoverallunemploymentproblem.Thedangeristhat increasingstructuralunemploymentwillunfoldinparallel withthedemographicproblem.Isuspectthatmostofthe projectionsregardingtheimpactofagingpopulationsas- sume reasonably full employment among younger work- ers.Ifthisdoesnotturnouttobethecase,thesituation willobviouslybemuchworse.AsIpointedoutinChapter 3, a payroll tax-based system for supporting retirement programsmightbecomecompletelyunsustainable.  Appendix / Final Thoughts / 215 CopyrightedMaterial–Paperback/Kindle available @ Amazon Businesses will never fully automate because of the high initial capital investment and the lack of flexibil- ity this implies There are somevalid pointshere, and I think thatthese factorsmay,inmanycases,servetoretardtheprocessof automation—butinthelongruntheywillnotpreventit. Somebusinesseswillcertainlydelayautomationbecauseof thehighcapitaloutlaysrequired.However,overtime,ma- chines will become more affordable, more reliable, and moreflexible.Atsomepoint,astechnologyadvances,ma- chineswillbegintooutperformworkerstotheextentthat a non-automated business will not be competitive. Con- siderthecaseofonlinebanking:itgenerallyoffersarange ofservices,suchasautomaticbillpaying,thatcouldnotbe offeredbyahumanbankteller. Keep in mind that automation offers cost benefits beyond simply eliminating wages. There are also payroll taxes, benefits, vacationtime, managementissues (and if youeliminateworkers,youcaninmanycasesalsogetrid ofthefirstlinemanagers),etc.Therearealsosafety and liability issues; consider the safety advantages of a fully automatedwarehouse. Theneed for technicaland economic flexibilitymay alsotendtoholdbackautomationforatime.Ifabusiness investsheavilyinspecificmachinestoproduceaparticular productandthenthatproductdoesnotsellwell,itmaybe stuckwith equipment itdoes notwant.The obviousan- swertothatis that,inthefuture,automationtechnology willbemoreflexibleandeasytoadapttodifferentprod- ucts.Ithinkthemanufacturersofautomationequipment THE LIGHTS IN THE TUNNEL / 216 CopyrightedMaterial–Paperback/Kindle available @ Amazon arefullyawareofthisissueandwillbuildincreasinglyflex- ibleproducts. Thereisalsotheissueofeconomicflexibility:abusi- nessthatemploysworkerscanlaythemoffinslowtimes, while a more automated business will be stuck with its machines.Again,Ithinkthat,inthelongrun,astechnolo- gy advances, businesses that don’t automate will simply not be able to compete: and that reality will overwhelm otherconsiderations. Anotherpointisthatbothofthesefactors(highcapi- talcostsandtheneedforflexibility)maytendtopushthe next wave of automation toward software applications geared toward eliminating knowledge worker jobs. Soft- ware is typically more flexible and has a lower up front costthanexpensivemechanicalautomation.AsInotedin Chapter 2, automation of these jobs, together with off- shoring, may mean diminishing prospectsfor knowledge worksandcollegegraduatesingeneral.  Machines may take over most unskilled labor, but they will never be able to do skilled or professional jobs that require lots of training and education I think this is a dangerous misconception that stems, in part, from a certain amount of hubris on the part of peoplewhoare welleducated.Theconventional wisdom isthatafencehasbeenerectedwithinoursociety.Onthe lush, garden side of the fence, are workers who have strongeducationsandtraining.Thesepeoplearebeneficia- riesoftheinformationage.Onthetoxicwastelandsideof the fence, are relatively unskilled workers. These people [...]... that machines might someday begin to think and reason was first articulated by the founder of computer science, Alan Turing (Please see the last section of this Appendix) Turing initiated the field of artificial intelligence with his 1950 paper “Computing Machinery and Intelligence.” Here’s howTuring expressed what he called the “Heads in the Sand” Objection (which, of course, he rejected): The consequences... available @ Amazon THE LIGHTS IN THE TUNNEL / 226 4 If things have gotten away from us, then we could, in fact, be much further along than we imagine This could perhaps be explained by suggesting that consumer borrowing masked the reality of the situation over the last few years and that the current crisis is the beginning of the reckoning This is an ugly scenario, but I don’t think it can be dismissed... Paperback/Kindle available @ Amazon THE LIGHTS IN THE TUNNEL / 230 think of as “experience” and “judgment” within specific fields of knowledge An intelligent and educated young worker wielding such tools might eventually be competitive with professionals and workers who currently command very high salaries Labor intensive areas of the economy begin to see increased automation As I have pointed out several... Material – Paperback/Kindle available @ Amazon THE LIGHTS IN THE TUNNEL / 232 argument for the adoption of an alternate income system that incorporates education as a primary incentive A rush for government jobs, and an increasing threat of taxpayer revolt In the absence of competitive pressures, the government sector is far less susceptible to automation (and, of course, offshoring) than the private sector... level of technology investment in general * Copyrighted Material – Paperback/Kindle available @ Amazon Appendix / Final Thoughts / 229 of jobs Because automating the jobs of relatively unskilled workers often requires high capital investment in mechanically complex machines, it may well be office and knowledge workers who are the primary initial targets of these newtechnologies Offshoring and automation. .. Paperback/Kindle available @ Amazon THE LIGHTS IN THE TUNNEL / 228 tight credit, consumer demand in the United States is almost certain to be unimpressive for some time The wind has been knocked out of the world economy s primary consumption engine, and it remains unclear where sustainable future demand will come from I’ve seen several articles in the financial press that point out that our future prosperity... job automation may someday lead to somewhat lower housing costs because it could result in a lot of empty office towers and commercial buildings Those buildings might then be converted to other uses—including perhaps housing If knowledge worker and office jobs migrate into the computer network, the really hot commercial real estate in the future might be in the locations where companies like Google and. .. begin to penetrate small business and possibly combine to capture higher value jobs I suspect that most economists discount the potential for outsourcing to invade the small business arena because they assume that the costs and inconveniences associated with setting up offshore relationships constitute a barrier My concern is that the offshoring industry, especially if it faces diminished demand in other... Final Thoughts / 217 have been heavily impacted by both technology and globalization They often survive by stringing two or three part time jobs together or work in lowwage jobs with fewbenefits The obvious solution is for us to find a way to offer these people additional training—so they can hop over to the good side of the fence I think that the problem with this scenario is that the fence is goingto... technology In fact, I think that the Copyrighted Material – Paperback/Kindle available @ Amazon THE LIGHTS IN THE TUNNEL / 218 arguments I have put forth in this book remain relevant even in the (I think unlikely) event that more educated workers are spared the impact of automation A great many jobs require people skills and, therefore, could not be performed by machines I think there are definitely some . past the threshold,butonceinside,theyjoin the river of lights asit courses over the panels on the tunnel walls. At first, we sensethat the businesses in the tunnel arestrainingsome- what. panels arenowappearing in manyplaceson the tunnel wallsthat wereoncedark. The entrepreneurs and businessowners in the tunnel are responding to the rapidly increasing de- mand. As the number of lights continues to increase, the speed. stable and reinforcing. The vast majority of the consumers in the tunnel now glowwithapredominantlygreenlight.Astimepasses, the collectiveintensity of the lights continuestogradually in- crease. Suddenly,