{"id":2010,"date":"2012-09-07T18:23:50","date_gmt":"2012-09-07T22:23:50","guid":{"rendered":"http:\/\/www.synapse9.com\/signals\/?p=2010"},"modified":"2016-02-21T07:20:58","modified_gmt":"2016-02-21T12:20:58","slug":"computers-taking-over-our-jobs","status":"publish","type":"post","link":"https:\/\/synapse9.com\/signals\/computers-taking-over-our-jobs\/","title":{"rendered":"Computers taking over our jobs and our pay?"},"content":{"rendered":"

It’s making business choices by <\/em>computer<\/em><\/h3>\n

that caused the rapid shift of earnings away from wages, <\/em>toward profits,
\n<\/em>in three big ways, \u00a0<\/em>explaining\u00a0<\/em>the massive shift seen in the data.<\/em><\/h4>\n

\u2014\u2014\u2014\u2014\u00a0\u2022\u00a0\u2014\u2014\u2014\u2014<\/p>\n

See also:
\nRobert Reich Feb 4 2015 article
\n<\/strong>in Salon<\/em>:\u00a0How even the “sharing economy” profits computers and\u00a0sends\u00a0labor backwards<\/a><\/strong>
\nand my long comment\u00a0It’s computers programmed to maximize growing investor profits<\/a><\/strong>\u00a0that naturally causes those effects.<\/p>\n

\u2014\u2014\u2014\u2014\u00a0\u2022\u00a0\u2014\u2014\u2014\u2014<\/p>\n

Preface:<\/strong> My last post on the dramatic declining share of wages in GDP since 1970 mostly discussed that remarkable change in behavior of the whole system in relation to how the numbing complexity of business would make computers better “wage earners”, shifting income from wage earners to investors. <\/em>Complexity too great to follow what\u2019s happening\u2026 ??<\/a> <\/em>The graph here is a simpler version, showing the same dramatic shift in the disproportionate changes in wages and GDP since 1970.<\/em><\/p>\n

This post is on how the same shift from wages to profits reduces demand for the products, “made for people” but for which neither business decision making tools nor investors have an appetite. \u00a0The economy visibly changed behavior. \u00a0It was coincident with computer decision making\u00a0emerging as a leading tool of <\/em>business, and the historic numbing complexity everyone has experienced (reflected in changing language use). <\/em><\/p>\n

The third important way is a later realization. \u00a0Computers are overwhelmingly better at making deterministic predictions… but can’t be programmed to consider human values, so they’re omitted<\/strong> from the rules for what to optimize… Computers are even more likely to keep applying old values that no longer apply than humans too. \u00a0 When resource prices go up, for example, <\/em>the old standard investment models say “speed up”, while <\/em>nature is signaling “slow down”. <\/em><\/p>\n

It may seem there’s nothing more dispassionate and “neutral” than automated decision making, but that easily becomes <\/em>purely <\/em>ruthless too. \u00a0So it seems to create a “perfect storm” of misdirection to use computers to multiply their programs in a time of fundamental change in our world. <\/em>If the model says “choice A = X profit” there’s no way to tell if a different story would be told had humans studied how ‘A’ applied in the current circumstance, so the model built without human values also omits any way to argue with it.<\/em><\/p>\n

You can see one global effect of this naturally “inhuman” d<\/em>ecision making of <\/em>computer models <\/em>in their universal penny shaving for profit. \u00a0That seems\u00a0directly\u00a0behind the <\/em>ever stricter control of decisions, <\/em>since computers were introduce, <\/em>by the computer’s\u00a0measure\u00a0of value, “the bottom line”. \u00a0Before that, business people needed to think of the business as a whole, and not a single number, ruling almost every choice. \u00a0So it produces ever growing pressure to “make money” for the sake of money, whether making a bit less to invest in other values might be a better fiduciary choice. <\/em><\/p>\n

– See also\u00a0A decisive moment for Investing in Sustainability<\/a>
\n– Below are recent\u00a0comments on a 9\/3\u00a0Business Insider<\/a> article <\/em><\/em>by Charles Smith <\/em>“The Future Of Work In America<\/a>” <\/em>suggesting “Technology and the Web are destroying far more jobs than they create.”<\/em><\/p>\n

Author’s Note<\/strong><\/em>: 2\/16 \u00a0– My work on this problem dates back to the 70’s really, and my developing methods for “whole system accounting”. \u00a0In simple terms “whole system” or “inclusive” accounting\u00a0means you can’t keep “robbing Peter to pay Paul” without noticing. It comes from the customary\u00a0methods of\u00a0natural science, not used in economics. \u00a0Instead of using\u00a0arbitrary accounting categories, one uses naturally defined partitions of the whole system to define your categories. \u00a0One is ultimately forced to get it right by there being lots of natural reasons you can’t keep “robbing Peter” (calling what’s unaccounted for ‘externalities’) without dire consequences.<\/p>\n

Whole system accounting models force you to look at what you are leaving out of the model, by requiring the use of\u00a0accounting categories that add up to the whole, partitions of the system. \u00a0 That’s\u00a0what natural science does to validate the data collection and produce “closed accounting” of the system in question. \u00a0 Oddly so do business financial accounts, but just not economic accounts. \u00a0 Using partitions of the whole for your accounting categories forces you\u00a0to estimate how much is going uncounted<\/em><\/span>. \u00a0 The first discussions of complete economic economic models of that kind are my 1983 General Allocation Theory<\/a> and 1985\u00a0Unconditional Positive feedback in the economic system<\/a>\u00a0in the SGSR proceedings for that year.<\/p>\n

__________<\/em><\/p>\n

1970 marked the sudden end of steadily growing US wages, as a sharply accelerating trend of growing economic <\/strong><\/em>inequity and loss or resilience began.
\n<\/strong><\/em><\/p>\n

\u201cInformation overload\u201d was a rapidly growing topic of\u00a0conversation\u00a0and
\n<\/strong><\/em>computers emerged as the premiere tool for driving\u00a0business profit.<\/strong><\/em><\/strong><\/em><\/p>\n

_________<\/strong><\/em><\/strong><\/em><\/p>\n

Was that how <\/strong><\/em>humans began to be replaced\u00a0by technology,
\nas things got too complex? <\/strong><\/h4>\n

comment 1.<\/p>\n

I think the question is quite relevant, and in line with Nobel laureate Wassily Leontief’s 1983 warning that humans will go the way of the horse in the business of providing goods and services. What most people don’t know is that started dramatically in ~1970,<\/p>\n

\n
\n
\n
\"\"
Indexing UN GDP (1880 to 2010) and\u00a0US median wage levels (from 1948) at 1970 shows how they grew at the same rates before 1970, and\u00a0then have been growing apart. \u00a0It shows the divergence between levels of wage incomes and wealth, a societal shift from earned incomes and wages, toward unearned income and finance.<\/figcaption><\/figure>\n<\/dt>\n
<\/dd>\n<\/dl>\n<\/div>\n

It’s remarkably clear in the data, quite indelible as a “coincidence” between introducing computers for business use in ~1970 and the “the great divergence” of breaking American society apart with lagging earnings from employment and multiplying earnings from wealth. Why did it occur. \u00a0\u00a0Following from my \u00a02010 Complexity too great to follow what\u2019s happening\u2026 ?<\/a>\u00a0<\/strong>one could explain it as cause by the numbing increase in the complexity of everything we do, affecting people but not the computers or the calculation of profits. \u00a0 Looked at from a social view of ever faster increasing economic inequity… it looks more like people using computers to make money, robbing Peter to pay Paul and not counting it.<\/p>\n

For those interested, here’s the same data without indexing the wage curves to GDP:<\/p>\n

\"\"
History US GDP with Percentiles of Median Wages approximately scaled as partitions of the whole<\/figcaption><\/figure>\n

<\/p>\n

Computers became the easy way to sidestep the cumbersome nuisance of people needing to think about what they were doing in order to keep multiplying their tasks. That “extension” of our bodies with a new tool had a range of different effects unlike any other ever before.<\/p>\n

That computers and their rules would later also run into EXACTLY the same problem, in our finding it not possible to update computers with new rules as fast as they were changing our world, is also very evident here. That’s a spot on match for what I predicted in 79, actually, as the ultimate certain limit of growth. The ultimate limit of growth is confusion, caused by the parts of the growing system needing to make ever more complex and complexly changing responses, ever faster.<\/p>\n

The 1st essay on the natural\u00a0limits of growth due to its growing unmanageable complexity from 1979, The Infinite Society<\/a>. \u00a0\u00a0A great deal of work since then was done on a general theory and method for understanding naturally occurring systems, discussed both elsewhere in this\u00a0research notes Journal, RNS<\/a>\u00a0and also in my\u00a0Open Systems Research Archive<\/a>.<\/p>\n

One of the many\u00a0ways to see what happened culturally, showing how we responded to the ever\u00a0growing complexity of the economy,\u00a0is looking at word use frequency for our use of technology to allow us to manage ever greater\u00a0complexity, using the\u00a0Google Ngram tool to show the\u00a0growing frequency in scanned books of the words:\u00a0Computer<\/strong><\/span>, Software<\/strong><\/span>, Code<\/strong><\/span>, Network<\/span><\/strong>\u00a0and Technology<\/strong><\/span>;<\/p>\n

Was 1970 the “moment in time” when the power of computers was realized by business<\/p>\n

\n
\n
\"\"<\/dt>\n
As discussed in the prior post on the subject, compare that to how our the frequency of the word “complex” first grew in pace with the growing complexity of the economy, and then started to drop off when life and decision making became more unmanageable complex.<\/dt>\n
\"growing<\/dt>\n<\/dl>\n<\/div>\n

__________<\/p>\n

Comment 2.<\/h3>\n

Well, debate points aside, there’s more to the macro-economic change than mentioned here. \u00a0 There’s clearly a major technology take-over of production and information services, so the “agents” of the economy with the appetites for consuming said services are increasingly not being paid enough to consume them.<\/p>\n

So… if it’s technology that’s producing the wealth, and not labor, what do you do to keep the economy afloat?? \u00a0 Technology has no need for the products it creates. \u00a0 In a tech dominant world the earnings of the technology go to investors, as profits, not to the technology for consuming the services. \u00a0As an a whole system “the circle won’t be closed” unless investors spend enough of their earnings hiring humans, so they can exercise their appetites in consuming the products. \u00a0 Investors… of course, live by the opposite principle, compound accumulation.<\/p>\n

I think this actually clarifies a heck of a lot, solving the riddle of humans appearing likely to go the way of the horse. \u00a0That’s impossible, as technology has no desire for its own products. \u00a0 \u00a0It also solves the riddle of Chapter 16 in The General Theory, where Keynes points to this same impasse, in another way. \u00a0 That to work as a system requires investors to be the spenders of last resort to relieve flagging demand, to hire people and not just multiply their money when needed.<\/p>\n

If there’s one thing an economy can’t do without
\nit’s the appetites that drive it, and technology doesn’t have any.<\/h4>\n

More data and discussion of the structural problem and natural limits of technology take-over on Signals:\u00a0Complexity too great to follow what\u2019s happening\u2026??<\/a><\/p>\n

 <\/p>\n

ed Notes: 9\/30\/12<\/p>\n

See also interesting new\u00a0approaches\u00a0to measuring previously intangible assets:<\/p>\n

Paul Herman\u00a0&\u00a0Tom Bowmer – Let\u2019s Value People as an Asset, and Bring Financial Statements into the 21st Century<\/a><\/p>\n

Jessie Henshaw –\u00a0Shining the Light on \u201cDark Energy\u201d<\/a>,\u00a0Systems Energy Assessment (SEA), for a true measure of Business Impacts<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It’s making business choices by computer that caused the rapid shift of earnings away from wages, toward profits, in three big ways, \u00a0explaining\u00a0the massive shift seen in the data. \u2014\u2014\u2014\u2014\u00a0\u2022\u00a0\u2014\u2014\u2014\u2014 See also: Robert Reich Feb 4 2015 article in Salon:\u00a0How even the “sharing economy” profits computers and\u00a0sends\u00a0labor backwards and my long comment\u00a0It’s computers programmed to … Continue reading Computers taking over our jobs and our pay?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","footnotes":""},"categories":[6,7,8,9],"tags":[],"class_list":["post-2010","post","type-post","status-publish","format-standard","hentry","category-mail","category-econn","category-theory","category-policy"],"_links":{"self":[{"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/posts\/2010","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/comments?post=2010"}],"version-history":[{"count":10,"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/posts\/2010\/revisions"}],"predecessor-version":[{"id":3354,"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/posts\/2010\/revisions\/3354"}],"wp:attachment":[{"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/media?parent=2010"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/categories?post=2010"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/synapse9.com\/signals\/wp-json\/wp\/v2\/tags?post=2010"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}