Ford (2009)/overview

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Reference

Ford, M. (2009) The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future. USA: Acculant Publishing. ISBN: 978 1 4486 5981 4

Summary

This book explores the possibility that automation will lead to mass unemployment, which will undermine the current economic model on a global scale. In contrast to most arguments about automation the author believes that we will reach a point where the vast majority of jobs will be automated without new paid jobs for people being invented/created. He also argues that it is white collar (knowledge worker) jobs that will be replaced most rapidly because they are easier to automate - it is very difficult to get robots to move around safely, but relatively easy to get software to analyse data.

The overall argument goes something like this.

  • Our economy depends upon people buying goods and services.
  • Currently people get money, which enables them to buy goods and services, either from paid work or from the state (which ultimately comes from taxing people who are in paid work).
  • Technology is advancing very rapidly. That is likely to continue in the future. At some point technology will be able to automate most jobs.
  • If the majority of jobs are automated then there will be very few people who have money that they have eared through working and (in our current system) there will not be enough tax revenue to continue to pay people who are not working.
  • Thus there will be no-one to buy the goods and services (that have been automated). So even the owners of those companies will have no income stream and our entire economic system will fail.

The proposed solution is to change the tax regime so that rather than taxing work (as at present) you tax companies’ income/profits. You then pay everybody (whether they are working or not) for doing things that you want to promote (e.g. learning, being environmentally friendly, volunteering, etc). Those who can get paid work and/or own companies/shares in companies can enhance their income, which retains incentives for working.

This creates a virtuous cycle: People have money for behaving in certain ‘virtuous’ ways. They can buy goods and services. Companies make profits. The government collects taxes based on those profits.

I found this basic premise quite compelling. I am less convinced that the proposed solution is the only possible one. However, it does look like one possible way forward. The challenge, as identified in the book, is how to transition between our existing economic model and the new one …

Notes

Read Kindle edition in April 2013

Highlight on Page 57 | Loc. 853-54
“Offshoring is the small wave that distracts you. Automation is the big one further out that you don’t see coming.”

Highlight on Page 61 | Loc. 925-26
“To suggest that technology is going to somehow create completely new job categories capable of absorbing millions of workers displaced from traditional jobs is pure fantasy.”

Highlight on Page 63 | Loc. 940-42
“A common misconception about automation is the idea that it will primarily impact low paying jobs that require few skills or training.”

Highlight on Page 64 | Loc. 959-60
“automation will often come rapidly on the heels of offshoring, especially if the job focuses purely on technical analysis with little need for human interaction.”

Highlight on Page 67 | Loc. 1006-8
“someone with a software job could eventually be replaced by a computer similar to the one that currently sits on his or her desk. There is no need for robotic arms or, in fact, any moving parts at all. Another, more common, term for people with software jobs is, of course, knowledge worker.”

Highlight on Page 67 | Loc. 1008-9
“Software jobs are also highly subject to offshoring.”

Highlight on Page 73 | Loc. 1073-75
“For knowledge workers, there is really a double dose of bad news. Not only are their jobs potentially easier to automate than other job types because no investment in mechanical equipment is required; but also, the financial incentive for getting rid of the job is significantly higher.”

Highlight on Page 75 | Loc. 1102-3
“A “hardware” job is a job that requires some investment in mechanical or robotic technologies in order for the job to be automated.”

Highlight on Page 79 | Loc. 1163-64
“Robots, and other forms of automation, will be used instead of people as soon it becomes cost effective and profitable for businesses to do so.*”

Highlight on Page 80 | Loc. 1168-70
“A third type of job is what I call an “interface” job. The people who hold these jobs, to a large extent, fill in the cracks which currently exist between various information formats and technologies.”

Highlight on Page 90 | Loc. 1308
“A more educated society is generally a more civil society with a lower crime rate.”

Highlight on Page 90 | Loc. 1312-13
“The danger is that as these trends accelerate, a college degree will be seen increasingly not as a ticket to a prosperous future, but as a ticket to a job that will very likely vaporize.”

Highlight on Page 92 | Loc. 1327-30
“As new high school graduates begin to shy away from a course leading to knowledge worker jobs, they will increasingly turn to the trades. As we have seen, jobs for people like auto mechanics, truck drivers, plumbers and so forth are among the most difficult to automate. The result may well be intense competition for these relatively “safe” jobs.”

Highlight on Page 92 | Loc. 1333-34
““green collar jobs that cannot be outsourced.””

Highlight on Page 97 | Loc. 1402
“What happens when machines become workers—when capital becomes labor?”

Highlight on Page 99 | Loc. 1428-
there must come a tipping point at which job losses from automation begin to overwhelm any positive impact on employment from lower prices and increased consumer demand.”

Highlight on Page 102 | Loc. 1458-60
“In a free market economy, nothing is produced unless there is demand—and “demand” in economic terms means desire combined with the ability to pay. There is no incentive to produce products if there are no consumers with sufficient discretionary income to purchase those products.”

Highlight on Page 105 | Loc. 1508-9
“We know that poverty is one of the primary drivers of war, conflict and terrorism.”

Highlight on Page 106 | Loc. 1511-12
“The problem is not with technology; it is with our economic system, and it lies specifically in that system’s inability to continue thriving in the new reality that is being created.”

Highlight on Page 113 | Loc. 1597-98
“from the point of view of consumers in the United States or Western Europe, offshoring looks exactly the same as automation.”

Highlight on Page 113 | Loc. 1602-3
“we have succeeded in globalizing labor and capital, but we have really not globalized consumption.”

Highlight on Page 116 | Loc. 1636-
in the conventional view of the future, technology is primarily seen as an enabler of globalization.”

Highlight on Page 117 | Loc. 1654-55
“Globalization is certainly significant, but it is really a mere offshoot of the primary force driving us toward change, and that force continues to be technology.”

Highlight on Page 119 | Loc. 1683
“China does not have an integrated, self-sustaining economy.”

Highlight on Page 122 | Loc. 1712-13
“China’s economic development, for all of its phenomenal progress, is in a race with technology, and that is a race it cannot win.”

Highlight on Page 131 | Loc. 1845-46
“Over time, as technology advances, most industries become more capital intensive and less labor intensive.”

Highlight on Page 133 | Loc. 1869
“workers are also the consumers of everything produced in our economy.”

Highlight on Page 137 | Loc. 1916-17
“the historical distinction between machines and intellectual capital is blurring. It is now very difficult to separate innovative processes from the advancing information technology that nearly always enables and underlies them.”

Highlight on Page 139 | Loc. 1938
“the market (or the collective purchasing power of consumers) is really the ultimate public resource.”

Highlight on Page 139 | Loc. 1941-42
“When a business becomes highly capital intensive and employs few workers, it becomes a free rider relative to the market resource.”

Highlight on Page 139 | Loc. 1941-42
“When a business becomes highly capital intensive and employs few workers, it becomes a free rider relative to the market resource. This is true in terms of purchasing power returned to the market and also in terms of its tax burden.”

Highlight on Page 140 | Loc. 1947-49
“In the long run, if advanced machine automation permanently disenfranchises a significant fraction of the work force, we will have no choice except to make some significant changes to our economic system so that the free market can continue to function.”

Highlight on Page 140 | Loc. 1955-56
“Payroll taxes are the primary method for funding public retirement, unemployment insurance, and in many countries, health care.”

Highlight on Page 141 | Loc. 1965-66
“If in addition to these demographic realities, broad-based automation of jobs unfolds simultaneously, the entire payroll tax-based system seems very likely to fall apart.”

Highlight on Page 141 | Loc. 1967-70
“capital intensive industries which enjoy access to the market while employing relatively few workers are not bearing their fair share of the costs associated with maintaining a viable consumer market. Such industries are also avoiding the costs associated with payroll tax-funded social welfare programs. In a very real sense, capital intensive industries are stealing from our purchasing power river and circumventing their responsibility to society.”

Highlight on Page 142 | Loc. 1974-75
“The solution is to get away from the idea of counting workers and taxing based on workers.”

Highlight on Page 142 | Loc. 1977-78
“Taxation should be based on a business’s success in utilizing the market resource, rather than on the number of workers it happens to employ.”

Highlight on Page 143 | Loc. 1991-93
“Under this new system, businesses would pay two types of taxes just as they do currently: (1) They would pay a gross margin tax instead of the current payroll tax, and (2) they would continue to pay the normal business income tax.”

Highlight on Page 144 | Loc. 1999-2000
“a gross margin tax would, of course, only work in the for-profit sector.”

Highlight on Page 144 | Loc. 2004-5
“extreme income inequality and concentration of income is not simply an issue of fairness. In fact, it drives at the very heart of a functional mass market.”

Highlight on Page 150 | Loc. 2087-89
“History has shown that the more technologically advanced an industry is, the more capital intensive it typically is; as a result, it employs relatively few people. This will somehow change in the future, so that millions of new jobs will be available for average workers.”

Highlight on Page 151 | Loc. 2103-5
“most people who forecast the future either cannot imagine, or are not willing to consider, a world in which human workers become increasingly superfluous. Economy-wide automation of jobs is not a technological impossibility; it is a psychological impossibility.*”

Highlight on Page 154 | Loc. 2141-42
“Today, virtually everyone in industrialized society—including especially the most wealthy individuals—derives his or her income directly or indirectly from the mass market.”

Highlight on Page 205 | Loc. 2793-94
“in the long run it is really consumption—not production—that is the one human economic contribution that will always be indispensable.”

Highlight on Page 206 | Loc. 2807-9
“idea that an individual’s consumption might someday be valued above his or her contribution to production is very difficult to accept. It flies directly in the face of the values and the work ethic”

Highlight on Page 206 | Loc. 2813
“For most of us, our job is really not who we are.”

Highlight on Page 206 | Loc. 2816
“Consumption is by far the best overall economic gauge of who we really are.”

Highlight on Page 206 | Loc. 2817-19
“Collective consumer choices have provided the basic logic that has disciplined and directed markets—and therefore driven technological progress—for centuries. In a very real sense, the specific choices we make as consumers create our overall prosperity.