The economy of useless things

Hey there, time traveller!
This article was published 10/4/2017 (588 days ago), so information in it may no longer be current.

The robots are coming! The robots are coming! Many social commentators raise alarms about impending technology induced job losses. The vision is dire — professional jobs in accountancy, law and medicine are all on the chopping block in the face of technical change that threatens to turn humanity into couch potatoes on minimum income, binge watching streaming TV.

This dystopian view is unlikely. Two changes will rescue us: the economy of useless things and how we define work.

We have seen this story before. Industrial revolutions all displaced workers from old technology. The first industrial revolution used steam to mechanize many industrial processes, notably textiles. Armies of displaced workers, known as "Luddites," wrecked the modern factories in the early part of the 19th century in a vain attempt to stall technical change.

The second industrial revolution applied electricity to the home and factory. The assembly lines of Henry Ford displaced the individual craftsmen and modern electrical distribution ushered in the time-saving home appliances we all accept.

With information technology and data processing, led by IBM and Bill Gates, the third industrial revolution transformed intellectual work. In an era of manual typewriters and transcription, a lawyer needed a support staff to issue contracts and prepare legal briefs. Now, documents are prepared using and re-using files of "boiler plate," while the lawyer inserts the unique elements specific to a case. Physicians increasingly rely on electronic medical records and external memory devices (iPads) to diagnose and plan treatments.

Artificial intelligence and biological interfaces are the hallmark of the fourth industrial revolution that exhilarate some and alarm many. A recent article in this paper shows the startling changes underway. In Sweden, consumers are having micro-chips embedded that allow them to order and pay for merchandise with a wave.

Aside from privacy issues, the changes that create interfaces between biology and artificial intelligence will surely transform much of the skilled labour in medicine. Embedded chips in my body will relay status updates on my physical condition to be interpreted by machine intelligence that simultaneously diagnoses and prescribes treatment. Those with chronic conditions may also have embedded pharma packs that unobtrusively adjust medication for the unaware patient.

For social science, the questions remain: will physicians still be needed? Will a young doctor graduating today be rendered jobless in a few years? Can machine technologies replace the bedside manner and interpersonal skills inherent in the practice of medicine?

The answers are: yes, no and maybe.

To understand these answers, let us review what happens with disruptive technologies. Most important: humans are adaptive.

With the fourth industrial revolution, we will be rescued by the economy of useless things and how we define work.

As a senior, I remain puzzled by the appeal of Facebook. I simply do not understand the narcissism of sharing the minutiae of my life. Even more baffling to me is Snapchat. Yet it has 158 million users and its parent company is trading at an estimated US$20 billion in market capitalization. Go figure.

For me, these are useless things; but for increasing numbers, they have become essential and downloading an "app" is an entirely new vector of economic growth.

The second trend is that each industrial revolution changes the nature of work. We are now upon the lifestyle economy, where machines replace the drudgery of manufacturing and office work and fill our "leisure." There is money to be made and jobs to fill in this new economy.

Rapid technical change always creates challenges. First, the owners of the intellectual property embodied by technical change will win big, resulting in income inequality. Second, education must do more than teach specific skills — it needs to teach the capacity to constantly renew one’s skill set and to manage knowledge using tools.

To clarify the answers to the three questions above: the newly graduated physician will remain part of medical teams, but only if their education adapts to the emerging practices. For example, medical exams should not test memory, but allow students to answer using their iPads and full access to the Internet.

Second, even though we believe change is instantaneous, technology still takes time to diffuse. Provided young doctors embrace change and support the fourth industrial revolution, they will be OK.

Finally, as for machines replacing bedside manner, all I can say is that Siri is amazing and my sex robot is on order.

Gregory Mason is an associate professor of economics at the University of Manitoba and a senior consultant at PRA Inc. His views are his own.