Saying that new jobs will always be created to replace those that have been eliminated by automation is a mechanism for avoiding a real problem that’s lurking on the horizon.
In 2004, at the height of its popularity, Blockbuster Video had more than 9,000 stores and employed more than 80,000 people worldwide. About 50,000 of the total workforce was employed in the United States. Going down to Blockbuster to pick up a movie was a Friday night ritual for many, this writer included.
Blockbuster and other video rental stores, along with the advent of affordable Big Screen TVs, were significant contributing factors in the growth of the home theater. People now had an alternative to $10 movie tickets and battling weekend traffic to get to the cineplex. An entire family could view a recent movie in the comfort of their own home for about $5. The only thing that was needed to complete the movie going experience was the popcorn, which frugal families bought at Costco by the caseload. Those who were less thrifty could buy a box of microwave popcorn at the checkout counter of the video store. The $25 cost of a Friday night date was reduced to roughly $6.
Blockbusters kept people on the couches and out of the movie theaters. Television had already put a damper on movie-going. In 1930, 65 percent of the population went to the movies once a week. By 1964, the number dropped to 10 percent. Despite the introduction of 3D projection technology and movie theaters offering added features such as in-seat dining, movie attendance is now at its lowest point since 1992.
Blockbuster was a transformational business on the entertainment landscape. Today, the company is gone. Streaming technology combined with an “all you can eat” subscription model killed it. (See Figure 1.)
Figure 1: As Blockbuster stock declined, Netflix’s grew.
Just as Blockbuster did away with the need to go to a movie house to see a film, Netflix, Amazon and other video streaming services did away with the need to leave the house to get the evening’s entertainment. America stayed home and enjoyed movies on the internet for a fixed monthly fee. Blockbuster went out of business.
Netflix employs around 5,500 people with gross yearly sales of $11.69 billion. Blockbuster’s gross sales in 2004 were $6 billlion. It’s astounding that Netflix does almost twice as much business as Blockbuster did at its height, with less than 10 percent of the Blockbuster workforce. Such is the benefit of automation.
Whereas Blockbuster needed to staff a store in every neighborhood to do business, Netflix and other streaming services work from a central, virtual location without the added expense of redundant staffing. Blockbuster had 9,000 cash registers to man. Netflix has one, which is run by some sort of AI.
So, where did all the out of work clerks and store managers go? Hopefully, they went on to other jobs, maybe ones that were far better than the day-in, day-out tasks that go with processing video cassette rentals. After all, that’s the conventional wisdom: There will always be new jobs to take the place of the ones eliminated by automation. But, let’s face a cruel truth: It takes a lot more knowledge and skill to work on video delivery at Netflix than it does to check out customer purchases at Blockbuster. And Netflix requires fewer people to make the business go. Would a Blockbuster employee in Sioux City, Iowa, have the skills and mobility necessary to go on to to work at Netflix in Los Gatos, California? Seems pretty far-fetched.
Right now, things are pretty rosy in terms of the economy. So the conventional wisdom prevails: As automation eliminates one job, another new type of job takes its place.
Yet, there is another way to look at it. There are good arguments to be made:
- As automation eliminates jobs in the modern world, new jobs for humans will NOT be created at levels required to keep a workforce fully employed. Rather, AI will do more and require less.
- The lead up to large-scale unemployment will not be slow. It will happen fast, over a period of a year or two. And, it very well might happen within a decade rather than decades in the future.
Blockbuster’s demise came about pretty quickly. The company was at its peak in 2004. Six years later it filed for bankruptcy with $1 billion in debt. The music retailer Virgin Megastore closed its last North American store in 2009, a year after music streaming Spotify went public on the internet. (Spotify generated $3.8 billion in revenue in 2016 with an employee count of 2,162.)
Productivity due to automation continues to accelerate. In the early 1980s, it took 10.4 man-hours of labor to make a ton of steel. By 2014, the number was down to 1.9 man-hours per ton. The increase in productivity is due to increased levels of automation (think: robots). Given the choice between buying a machine and hiring a worker, companies are more likely to choose the machine. Thus, it’s entirely possible to imagine that the day when a few humans will be supervising the work of many robots making steel is close. Not too soon after that, a single human will be supervising an entire robotic workforce. Then, finally, as AI continues to improve and further dominate the production landscape, no humans will be required. The robots will supervise themselves.
How far off in the future is this time? Dunno. But I can tell you that robots are now assisting with surgery on humans. How long will it be until one surgeon can use automation to do the work of 10? Then, how long will it be until AI can do surgery unsupervised, five years? Ten years? Only 10 years ago driverless cars were still on the test tracks; today they are roaming the streets of Mountain View, California. An autonomous robot with a scalpel is no longer the stuff of science fiction. Once AI can do surgery unassisted, where will all the displaced surgeons find work? Maybe a few will go into research. What of the others?
At one time there were 200,000 horses in the City of New York. They provided the labor for a good part of the city’s transportation system. Today there are fewer than 1,000 horses. Cars, trucks, planes and trains have taken over. There’s no benefit to employing a horse when a car can do the work better. As General AI continues to develop and improve its ability to connect the dots as only a human can, how long will it be until the labor of most humans is not needed? What will it be like when there is no benefit to employing large parts of the human population because a machine can do the work better? Yes, the ramifications are scary. But, the possibility needs to be considered. The sad fact is that few people are considering such a scenario, let alone coming up with ways to address the impact on the horizon. Saying there will always be employment for humans is an avoidance mechanism, particularly given the fact that modern machines are going beyond purely mechanical labor and doing more thinking work.
In 1990, people thought there would always be movie rental until there wasn’t. In 2000, people thought there would always be a Virgin Megastore until there wasn’t. Today, Sears keeps closing stores. It will soon be gone from the face of the earth. Yes, Amazon is opening brick and mortar stores. This might be good news. But the fact that these stores are highly automated and have few employees cancels out the good feelings of the moment.
These days when a company comes to an end, it’s not a drawn-out process. It happens fast, over a period of a year. Many of the people left behind are confronted with low-wage, “show up and do it” jobs. The more educated have access to a pool of better paying work that comes with an excruciatingly steep learning curve. Whether the job is low-wage retail work or high-paying tech work, each worker is—or will be—competing against AI-powered automation that can—or will—do the job better.
It’s not a pretty picture. But it is one that can avoided if we decide to think about alternatives and put those ideas into action. Sadly, there are more people thinking about how to get to Mars than solving the problem of unemployment on a massive scale due to the proliferation of industrial automation powered by general AI. The problem is that we still seem to be stuck at, “There will always be jobs to replace the ones eliminated by automation.” To say otherwise is deemed Cassandra talk. Maybe so. But to not give the problem consideration is beyond folly. It’s a danger that will exact a heavy price from everyone who has to work to earn a living.