By James Murray, an American living permanently in Ajijic, Jalisco, Mexico. After having owned a business for 27 years, he now spends his free time musing on the world.
The world is undergoing a mega shift and most of the governments have no idea how to handle the problem. Computer power has reached the point where almost any job can be automated, and computer pricing has reached the point where it is profitable to do so.
When people think of automation, the first thought is of robots working on a production floor in manufacturing but that is just the tip of the iceberg. The real job killers are the things around us every day that we never notice.
The internet has been the biggest job killer in history. If you look at the rise of the internet and the job participation chart, you will see that as the internet grew, jobs shrunk. This trend will continue.
Look at the Kindle, a nifty little device. Before the Kindle, if you wanted a book, you hopped in your car, drove to a bookstore, and bought a book. Books were printed, shipped to bookstores, put on shelves, then a clerk took your money. Today, you go on the net, find what you want and punch a button. In seconds, you have the book at your fingertips. No printing, no binding, no shipping, no wear and tear on your car, no gas used, never talk to a human.
No one thinks of a Kindle as automation, but it is. Because of the Kindle, trees do not have to be grown, paper does not have to be made, shipping does not have to be done, printing does not have to be done, and bookstores are put out of business.
Email is another job killer. The USPS is basically going to lose 300,000 people because of e-mail. Unseen is the loss of jobs in making envelopes, stamps, gas usage, and wear and tear on delivery vehicles.
Retailers constantly complain about Wal-Mart but Wal-Mart is small potatoes compared to the massive online retailers. You can sit at home and find almost anything made, compare prices and purchase it and have it shipped to your home and never talk to a human. If you think a manufacturing plant run by robots is amazing, check out a YouTube of an Amazon warehouse. It is fully automated.
People think of automation in large terms but it is really millions of small advances. Twenty years ago, if you had a new grandbaby, you went to the hospital, shot some pictures, took the film to a processor, and got 20 copies made. Then you mailed them to the relatives. Today, you snap the pictures with your smartphone, attach them to an e-mail, and send them to the relatives before you leave the hospital. No film, no processing, no mail.
Know anyone in a “typing pool”? I didn’t think so. Now, word processors allow one person to do the work of 20. File clerks are the same way. Punch a button and the computer files it or retrieves it.
Quality of products is a killer also. Early TVs were constantly requiring attention. Seen a TV repairman recently? Fifty years ago, a car with 30,000 miles was worn out. Now, 300,000 miles is not unusual. That’s mostly because of better manufacturing tolerances brought on by automation.
There’s a study out that says that 47% of all current jobs can be replaced by automation. Even if only 25% are replaceable, that is 30 million people in the US who will lose their jobs over the next couple of decades.
There is a secondary problem with this shift.
Henry Ford added some automation to his line and called the union chief over. He pointed to the machines and said “They don’t pay union dues”. The union guy said “They don’t buy cars either”. In a nutshell, that is the problem.
When automation replaces a job, it will not buy the product or service.
Governments don’t seem to have caught onto what is happening. The politicians that I see are all talking about creating jobs. Doing what?
The official US unemployment rate is 7.2%. The actual rate is more like 11%. In Europe, 25% or more in places.
Education will not do it. Education does not manufacture jobs. If it did, we would not have all these college graduates in minimum wage jobs. If we educated everyone to PhD levels, you would still have minimum wage people at McDonalds, they would just all have PhDs.
The speed of automation is increasing while new job creation is not. The spread is increasing daily.
The governments that understand what is happening and work out ways to adapt will survive. The others will fail as social unrest takes over. It is already a major problem and it is just going to get worse.
The US is leading the way because we have the talent to come up with the automation, the money to produce it and the high labor rates to justify it. However, FOXCONN, the largest assembler in China has stated that they intend to replace 1 million jobs over the next 5 years with automation and their labor rates are much lower than the US.
What happens to society as more and more people don’t have jobs? What happens when you can produce products cheaply and of high quality but don’t have working consumers with expendable income to buy the products? By James Murray, Mexico.
Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely. Click on the beer mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.