Humans in the machine

There’s some very interesting insight into the human workforce making the digital platforms work in Ghost Work: How to Stop Silicon Valley from Building a New Global Underclass by Mary Gray and Siddarth Suri. The book as a whole doesn’t quite cohere, though, nor deliver on the promise of the subtitle. The bulk of the book draws on interviews and surveys of people who work via platforms like Amazon’s famous Mechanical Turk, but also the internal Microsoft equivalent, UHRS, and a smaller social enterprise version, Amara.

This is all extremely interesting, about how people work – in the US and Bangalore – their tactics for making money, dealing with stress, how many hours they have to work and when, how much or little agency they have, and so on. Not least, it reminds or informs readers that a lot of AI is based on the labelling done by humans to create training data sets. However, not all the ghost work described is of this kind and some, indeed, has little to do with Silicon Valley except that a digital platform mediates the employer and the seeker of work. As the authors note, this latter type is a continuation of the history of automation, the role of new pools of cheap labour in industrial capitalism, and the division of labour markets into privileged insiders and contingent – badly paid, insecure – outsiders. The new global underclass is just one step up from the old global underclass; at least they have a smartphone or computer and internet access.81uywR4bPoL._AC_UY218_ML3_The survey results confirm that some of the digital ghost workers value the flexibility they get reasonably highly – although with quite a high variance in the distribution. Not surprisingly, those with least pressing need for income most value the flexibility. Some of the women workers in India also valued the connection to the labour market when they were unable to work outside of their home because of childcare or family expectations. Similarly, with the Amara platform, “Workers can make ghost work a navigable path out of challenging circumstances, meeting a basic need for autonomy and independence that is necessary for pursuing other interests, bigger than money.”

The book’s recommendations boil down to recommending that platforms should introduce double bottom line accounting – in other words, find a social conscience alongside their desire for profit. Without a discussion of their (lack of) incentives to do so, this is a bit thin. Still, the book is well worth reading for fascinating anthropological insights from the field work, and for the reminder about the humans in the machine.

 

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The Technology Trap

Anybody interested in the economic impact of digital and AI, in particular on jobs, will want to read Carl Frey’s new book, The Technology Trap: Capital, Labor and Power in the Age of Automation. He is probably best known for his rather gloomy work with Michael Osborne (original pdf version here) highlighting the vulnerability of many jobs – almost half in the US – to automation in the next couple of decades. The book expands on the issues that will determine the actual outcomes, and is – as the title indicates – still quite pessimistic.

The structure of the book is historical, with sections on pre-industrial technologies, the Industrial Revolution (which saw widening inequalities), the mass production era (which reduced inequalities and created an affluent middle class), the recent polarization in the era of globalisation and digital, and future prospects. The key distinction Frey draws in between technologies which substitute for labour and those which complement it. Whereas the 19th century and the present seem to involve the replacement of people with machines, the 20th century innovations needed increasingly skilled labour to work with them.

Although I am probably not as gloomy about future prospects for work and incomes, I really enjoyed reading the book, which covers a wide range of technological applications in addition to the well-known historical examples. It leaves open two questions. One is about the present conjuncture: what explains the combination of seemingly rapid technological change and adoption with – in at least some OECD economies – very low unemployment rates? The answer might just be ‘long and variable lags’ but the question surely needs addressing.

The broader question, or set of questions, is really about the interaction between technology and labour market and other economic institutions. Although automation is likely to have the same general effects everywhere, the outcomes for workers will be refracted through very different national job markets, education systems, tax systems and so on. How much can any individual country lean successfully against the wind? Frey is not (unlike Robert Gordon) US-centric but does not get into these issues.

And beyond the response to technological change, what is it that determines the direction of technical change in the first place? The book treats the labour substitution or complementing as exogenous. But why were electric unit drives in auto plants and internal combustion engines created as complementary and yet automation in today’s car industry seems like it will substitute for labour? It seems to me this must be an institutional story too, but I don’t think it’s been told yet.

51VabazLy7L._SX327_BO1,204,203,200_The Technology Trap

 

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Work (and more) in digital times

This week I’ve been dipping in to Work in the Digital Age: Challenges of the Fourth Industrial Revolution, edited by Neufeind, O’Reilly and Ranft. This is a collection of short essays brought togoether by Policy Network, the centre-left ‘progressive’ think tank. It’s a chunky book, starting with sections essays on prospects for employment and the character of work. These cover, for example, the likely impact of automation in destroying and creating jobs, and the nature of work in the ‘gig’ economy. A section on labour relations and the welfare state follows. There are then chapters on individual European countries, ordered according to the ‘digital density’: Scandinavia and the Netherlands are classed as high, the UK and Germany medium, France, Italy and Central and Eastern Europe as low. There are also chapters on the US, Canada and India. The comparisons between countries were at the heart of the project, and I admit to not having read these chapters.

Given that I read so much of the economic literature on these issues, I haven’t found anything startlingly new so far, although there are some interesting perspectives. For example Martin Kenney and John Zysman consider the question of financing technology start-ups when they face a long period of losses because of what’s known in the platform literature as the chicken and egg problem: a platform needs users on both sides – riders as well as drivers for instance – because it won’t attract riders without enough drives and won’t have enough drivers unless it has a user base. The winner-take-all success stories then look for a long period of rents to recover those early losses, although many platforms simply fail. The essay argues that it is not clear whether this financing model is creating economic and social value. (I argue in a forthcoming paper that this is one aspect of the wider failure of competition economics to have figured out how to compare static welfare gains and losses to dynamic ones.)

In other chapters, Ursula Huws et al report new surveys on the extent of gig work or crowd work – from 9% in the UK to 22% in Italy, usually as part of a broader spectrum of casual work; Monique Kremer and Robert Went set out an agenda for ensuring automation does not increase inequality, covering the direction of robotisation, the enhancement of complementary skills, and distributional policy instruments; and in an introductory essay Luc Soete on the productivity paradox discusses similarities with and differences from previous technological revolutions. The final chapter sets out a reform agenda – education and training; work transitions; social protection; redistributive taxes and transfers; and investing in infrastructure and innovation. This is high level stuff, and therefore a bit motherhood and apple pie. Having contributed essays to this kind of collection myself, I know this pitch of generality is inevitable, but do ache for some policy specifics as opposed to ‘a new inclusive narrative’.

For an overview of the technology and work debate, this is a useful volume, though, and it can be downloaded free from here. It’s certainly a good place to start for a comparative perspective, and the references to country-specific literature look really useful.

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Humans need not apply

As one would of course expect from the economics correspondent of The Economist, Ryan Avent has written a very clear account of the way digital technologies, and the globalisation driven in part by technology, is changing the ways people can earn a living. The Wealth of Humans: Work and its Absence in the 21st Century brings together the debate about robots destroying jobs, arguments about the ‘death of distance’ and literature on the re-emergence of cities as economic hubs, the issue of inequality, and the more recent discussion of whether or not the world is in for an era of ‘secular stagnation’. The focus is on three related trends: automation, globalization, and the enhanced productivity of a highly skilled minority of people.

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It ends up being a rather pessimistic synthesis. The starting point is unarguable: “Society must go through a period of wrenching political change before it can agree on a broadly acceptable social system for sharing the fruits of this new technological world.” A few years ago this would have seemed hyperbole, but no more. And yet the rest of the book tends to suggest that this political change cannot happen. Essentially, Avent does not believe enough people can become educated or skilled enough to share the benefits of automation and globalisation with those happy few whose cognitive skills have made their incomes increase. He does not think as many as 50% can complete tertiary education. “The proportion of highly educated workers to less educated workers is no longer going to grow in the growth-boosting, inequality-dampening way it once did.”

Part of this, I’d take issue with. I don’t agree that skill upgrading has ‘run out of steam’. The character of tertiary education clearly needs to change; we are in a stage like the persistence of classical education in the late 19th century. The educational establishment is slow to change – but it will, or it will be disrupted. But I’m much more persuaded by James Bessen’s argument (in Learning by Doing) that in the later stages of the technological transformation of production, the necessary skills are steadily standardised and thus able to be codified and taught. And, while addressing the ‘lump of labour’ fallacy, Avent nevertheless argues that, “The problem is the sheer abundance of labour.” Yet he also sees technology replacing ‘expensive’ labour. Surely labour=people=knowledge, pretty key in an endogenous growth, knowledge-based economy. It seems more likely that ‘work’ will be redefined, with a role for appropriately skilled humans, as it has been so many times before.

There are some very nice details indeed in the book. I didn’t know that Robert Gordon used to ask audiences whether they would rather give up post-2000 technology or indoor plumbing – the answer used to be the former, until smartphones came along. And indeed in the developing world, people would clearly rather have their phones and the internet. (An aside: indoor plumbing is a great example of why technology is social more than it’s technological. It’s a simple and well-known technology, yet one many countries are unable to make work for them.) Arvind Subramanian’s term ‘fluff not stuff’ for weightlessness (cf The Weightless World) was new to me, although perhaps a little too derogatory-sounding for the source of most of the value-added in developed economies.

Avent concludes that the reason to be pessimistic is that there is ‘no-one in control’, able to pilot society wisely through the upheaval. Looking back over the past 200 years, someone thinking they are ‘in control’ seems a pretty bad idea to me. But, to get back to the starting point, the politics, I’d agree that this is the territory for pessimism. Where leadership to generate a sense of progress and confidence would be desirable (because expectations matter no end for the economy), we have politicians reacting to people’s fears. It’s understandable, but it isn’t what we need.

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Think yourself lucky

Robert Frank’s new book

is a nice, brief overview of why luck plays such a big role in an individual’s economic success (or otherwise).

[amazon_image id=”0691167400″ link=”true” target=”_blank” size=”medium” ]Success and Luck: Good Fortune and the Myth of Meritocracy[/amazon_image]

This very readable book canters through some of the key evidence on how economic success depends on chance, amplified by phenomena such as winner take all markets, and by policy. Mainly, though, it is another pitch for Frank’s favourite policy prescription of a progressive consumption tax, something he’s been advocating since

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and possibly before. As in those books, he relies here on the argument that much consumption consists of positional spending and the ‘arms races’ need to be limited by policy intervention.

I’m not persuaded about the consumption tax idea, because when you ask policymakers to select luxury goods will probably choose something that might be a luxury now but will become a useful mass market product. Remember Norman Lamont in 1991 taxing mobile phones as yuppie status symbols – which indeed they were at the time. (“I turn now to what I regard as one of the greatest scourges of modern life. I refer to the mobile telephone. I propose to bring the benefit of car phones into income tax and to simplify the tax treatment of mobile phones by introducing a standard charge on the private use of such phones provided by an employer. Tax will be paid of £200 for each phone for 1991-92. I hope that, as a result of this measure, restaurants will be quieter and the roads will be safer.” Budget speech 19 March 1991.) One could be on safer ground with, say, gold leaf covered sports cars, but even so my preference is for progressive income and especially property taxes.

Still, the reminder about the important role of luck is welcome, although it is surely neither wholly necessary nor sufficient for economic success. The most important conclusion to my mind is the negative one that people who are poor are most likely unlucky, whether that be in terms of their parents’ income and status or the quality of their school and neighbourhood, and poverty or unemployment can’t be blamed on laziness. As Julia Unwin pointed out so eloquently in

, we often make unjustified moral judgements about poor people out of fear; we need to recognise the bad hand life has dealt them.

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