Amazulu

The Luddite Fallacy is real - it was in 1817 and now in 2017

Economics 101

Shard

Quite the boom. Don't think there's much choice about numbers.

Shard

It used to be real. 21st century, advanced AI, not so much.

Amazulu

It's still in play IMO

Going back to economics basics shows.us this

Beoz

Its going to be different this time round right?

Is that because the AI will be in control of the finances? They will have their own internal economics systems in play, deciding what gets developed and what doesn't?

Remember, economics is the core driving reason behind technology development.

No money, no development.

Shard

Nope. Not Skynet or other sci-fi tosh.

Sometimes systems are victims of their own success.

You should think beyond simplistic (and dated) axioms like "no money, no development" or "automation creates jobs". They inhibit learning.

GarryP

It always confuses me that on one hand you claim this - a capitalist viewpoint on science and technology development (which is wrong btw). And on the other you think that new jobs will miraculously appear when the economics is against it.

Advances, like automation, happen because the academic jumps occur, which then get exploited by those looking to make a fast buck. The speed can be tweaked via the availability of finance - but that is more an output factor (sentiment) than an input. Direction, except in special cases, gets determined by the science.

Most of 'economics' is limited rules of thumb, but the basics of it are just greed manifest in a complex adaptive system - which is the best way to understand the impacts. Industries will implement automation to cut costs and increase profits, which will cut wages and national economies, which will in turn drive more automation to cut costs and keep the profits up. Right wing governments will blame 'lazy individuals' and cut benefits/immigration. Centralist governments will try to limit the speed of automation (and probably fail). Since the national economies are depressed nobody will be creating new roles and things will enter a significant and decade long slump. The only way out will be to reengineer society along different lines - but most politicians won't be up to that task, and vested interests will stall it (same as climate change reformation).

And somewhere in that, the money system collapses (again).

Beoz

Which is right BTW. War is also another technology driver.

Nope. Academic jumps occur because thought of a fast buck (try big bucks) or war provides investment required to make it happen. Please provide a case where its not.

So what?

Wrong. Industry implements automation to increase production. Remember, saving money is finite. Making money is infinite. Please don't start a business. It will go broke pretty quickly.

Right wing governments tend to focus on immigration in the right areas. Areas that benefit those they are governing. They will increased immigration where demand is short, or where there is profit to be made.

On the flipside left wing governments stifle the right type of immigration, and in turn neglect the people they are governing and hand out immigration to economic migrants.

Hence why most recent left governments leave western countries in a state of economic disrepair.

Beoz

Ok. Give us the crystal ball scenario if its not Skynet?

scrubbedexpat098

They absolutely do inhibit learning, you're right about that. On the railway, the fat controllers have to spend an hour a week setting routes manually so they don't forget how to in case of an emergency. It'll be the same with the driverless cars. We'll all just be brains in jars soon enough, and the jars won't have to be that big either

Shard

Not sure what you are getting at here. As you say, automation is brought in to boost productivity, and as Garry says, those productivity gains are driven by competitive pressures. What I see happening (and I think it's already happening) is that smart machines and smart IT applications creep into the factory/office and gradually reduce headcount.

Your argument seems to be, these redundant staff can be re-deployed elsewhere in the company "making money is infinite" truism, but in practice they lack the skill set and markets are not infinite, because demand is not infinite. The other argument is that the redundant can be re-trained in new technologies (the Luddite experience) but this ignores the fact that increasingly the required cognitive skills may be beyond the mental abilities of the those who need retraining. Example, an accounts clerk is not likely to become a software engineer. When you look at the intense competition for employment amongst the young and the old, you have to question why is it so intense? If "making money is infinite"? It's intense because the simple, low-skilled jobs of the past, checking stock, preparing invoices, painting cars, are all now done by machines.

That's not to say there will be no work, but I think it will be a different kind of work, requiring different kinds of reward models.

Beoz

The above demonstrates you haven't quite understood the difference between productivity and cost cutting. Garry doesn't talk about productivity. He talks about cost cutting. He talks about a finite saving. To a smart business, cost cutting is secondary to productivity gains, which is infinite. Cost savings has a value between x and y. Productivity has a value not between anything. It has a starting point, but no end.

Where do you think the priorities of automation are?

Farming, textiles, etc. It was never about cutting head count. It was all about increasing productivity.

The only time we consider cutting head count is when times are lean, the demand for our production is down, there is no requirement to produce. That's not an automation thing but an economic one.

GarryP

Still don't think you are getting it, so let's put this in terms you might understand. Let's suppose we have a McD 'restaurant'. Maybe 10 staff on at a time, flipping burgers, getting orders wrong, occasionally cleaning. Now let's create an 'automated' restaurant where that's all done by robot/etc. Which reduces costs by 30%-50%. To you that's cost cutting, and indeed to McD that's a massive increase in the profit line.

First point you miss; in a mature business there's not a lot of scope for 'to infinity and beyond'. That's why they are mature, and why the focus is on sustaining profits and even raising them by reducing costs.

So McD, having an automated restaurant template, can roll it out across all their stores and franchises, basically as fast as they can build the robots - sacking the staff as they go.

Second point you miss; impact of automation is about scalability and timescales. Automation by it's nature can be rolled out fast, and therefore put hundreds of thousands out of work in short order. In fact the emphasis is on rolling out fast to recoup development costs and get ahead of the competition. That goes for all automation.

McD can now look at what else that tech can do, and they likely find that they can create small automated takeaway stores - Burger ATMs - closer to where the demand is. They could also put the automation in an automated vehicle - so no high rent stores either.

Third point you miss; the automation changes the business model by allowing things that no human can do - which then ensures no human CAN be involved. No business looks to say "how can we add people back in" - their developments from that point on are predicated on automation. Even if some marketing dweeb thought 'personal greeters' were a good idea, the model precludes it.

For all you talk about cost cutting vs productivity - they are pretty much the same thing in mature markets. Cutting the cost of manpower in producing a burger is equivalent to infinite productivity. What sets the bounds is how many burgers you can sell, and at what profit. For a mature business its the bottom line that counts, and that means cost cutting, either explicit or implicit, is the key. The only time 'productivity' really comes into it, outside it's role in cost cutting, is in immature markets and the ability to scale swiftly - which is where automation comes in again.

Beoz

Whoops. You chose McD's as an example. Bad idea.

So microwaving a burger and juicing up some fries can already be fully automated and to some degree already is. The layering of the meat, cheese, etc can be already be automated, so can the wrapping, so can the distribution to the consumer, so can the payment. So clever trousers, why do we still see a collection of spotty faced teenagers behind the counter?

Pretty simple.

Firstly they are cheap. People are cheap. All they have to do is shift 2 big mac meals an hour to pay their wage.

Secondly McD's unlike yourself understands the consumer likes a restaurant which is staffed by humans.

Thirdly its all about the upsell. Humans are more likely to take the "Upsize" option if its presented by a fellow, yet lowly paid human.

Bad analogy Garry considering a McD's can already be fully automated and is not.

What McD's want is volume of sales. Saving cost on spotty teenages is small fry (mind the pun).

What you will notice McD's doing in their high volume stores is adding the automated ordering touch screen. See McD's on M1 between Sydney and Newcastle. There are still a hundred people working both behind and in front of the counter with the sole purpose of volume sales. Its all about taking the order as fast as possible, voluming it up, shifting it out, then onto the next. The automated ordering screen add further points of sale and guess what, more staff to help people make that order through the automated system. And that volume means more cleaners, more burger flippers, and people to hand you the Big Mac meal.

Your theory is great, but its far from the way customer facing businesses are heading.

GarryP

Wow, you got just about everything wrong. You really doubled down on that didn't you?

Because a spotty teenager is going to upsell you from medium to large fries? Really? You think their human face is an advantage?

Here, have some expertise :

Or maybe the former head of McDs :

Thing is, rolling out large scale automation will become a political and CAPEX matter. Going softly for the moment reduces those problems. However once the opportunity comes via a strike or minimum wage hike; or just when the stock holders need to be placated over the profit line, well there's these jobs that can be replaced ...

That point about mature business being growth limited within the same model went over your head?

So you think the burger flippers will be kept?

You don't realise that an automated machine will be faster and more flexible with a higher quality output? More like the one on the left vs the one on the right? Consistently and quickly?



You accept that the sales part, the bit where you just said the value added was is being automated, and you DON'T think the behind the scenes stuff will be?

Your theory has more holes than the cheese in the Mushroom Swiss burger.