White House Chronicle

News Analysis With a Sense of Humor

You Need to Be Brave for This New World

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Pondering the future requires an extrapolation from a data point in the present. But different data points give very different futures. Beware of the prognosticators.

Take this as a data point: Stephen Entin, senior fellow at the Tax Foundation, a think tank devoted to tax studies since 1937, predicts that with an aging population and low birthrates, we’re going to need more immigrants to fill the federal and state coffers with their taxes. We’re also going to need hundreds of thousands of workers for health care and aged care in the years ahead, he says.

Or take this as a data point: MIT Sloan Professor Tom Kochan fears that artificial intelligence will substitute for millions of employees. Retraining is possible, but can you see a long-haul truck driver pushing wheelchairs in an assisted-living facility? Not easily.

Upheaval in work is the most predictable aspect of the future.

It is, if you will, already arriving in the workplace. New techniques and new concepts of what is work are afoot.

The old concept is that a person leaves school, gets a job and signs on to the social/work contract — gets company-paid benefits and expects security and stability. The infrastructure of society pointed the way to employer-employee model.

The new concept is the gig economy, where contract work and freelancing rule. The work/social infrastructure where medical insurance, Social Security and retirement are part of the deal is dying. But a one has yet to emerge in concept and in law.

Business is in the throes of its own future adjustment. Take 3D printing, more correctly called additive manufacturing. What was novelty a decade ago is now a tool used in industrial plants across the country. Instead of taking a chunk of metal, say aluminum, and cutting and lathing it to make a part, which wasted most of the metal, there’s no waste with 3D printing.

Now to make a part, you print it from metal powder to a design lodged in a computer. The saving in material, shipping and manpower is enormous.

And additive manufacturing, just like everything else on the shop floor, can be automated. Machines can sinter — the term for 3D printing — through the night with only artificial intelligence supervision.

There’s a new existential worry in every large enterprise in the United States, from banking to manufacturing, from electricity generation to hospital management and from building crane operation to pharmaceutical design: cyber-vulnerability.

To paraphrase Leon Trotsky, you may not be interested in cyber-war, but cyber-war is interested in you.

I’ve interviewed widely on the subject, from top academics to some of the most successful cyber-security entrepreneurs, to National Security Agency sources. The story is the same everywhere: Nothing connected to computers is entirely safe; and if it’s safe today, will it be tomorrow? That plague, like the plagues of old, will, I’m assured, be with us for decades, if not centuries to come.

Cyber-defenders build, cyber-hackers build around. It’s a version of what one secretary of defense, Harold Brown, said about the Soviet threat in the Cold War: “We build, they build.”

The changes are all around the home: Everything has changed since the day of the black AT&T phone, but you haven’t seen anything yet. Your packages may be delivered by drone, your phone service will be entirely mobile, and your life will be dictated by electronic secretarial aids. Alexa is just the beginning. With artificial intelligence, these robots will talk back to us and maybe argue, shudder the thought.

I pity the dogs. We had a dog that would be very upset if she heard my wife, a talk show regular, on the television when she was also elsewhere in the house. Dogs are sensitive to these things.

What if man’s best friend, eternal unquestioning companion, develops a strong affection for the electronic assistant and changes loyalties, especially if the gadget is feeding the dog? Will it be as Julius Caesar might have said, “Et tu, Fido?”

 

 

Photo: Photo by rawpixel on Unsplash

Skilled Jobs Go Begging Now, But Thinking Machines Are Coming

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Consider it as the work dichotomy.

There is a shortage in the millions for skilled labor jobs in the United States. The country is desperate for men and women who drive trucks, operate machines, weld, wield hammers — or can fill skilled jobs in dozens of categories from bulldozer operator to utility lineman.

Bill Hillman, chief executive officer of the National Utility Contractors Association, the organization that represents contractors (people who do everything, from replacing electricity poles to working down manholes to operating heavy equipment), says getting help is a major problem for his members. So they are setting up training programs and working with schools and community colleges.

But these also are some of the people who could be jobless due to artificial intelligence (AI) in the near future. Thomas Kochan, co-director of the MIT Sloan Institute for Work and Employment Research, told me this “middle of the labor market” is coming under attack by AI deployment.

John Savage, professor of computer science at Brown University, foresees a need for major retraining of workers with the spread of AI. But he told me he is “optimistic”: He sees major displacements but new opportunities.

Displacement is a worry for workers, but so is job quality deterioration in the so-named gig economy or freelance economy: a volatile labor pool where the employer holds most of the cards.

Gig workers are spread among diverse occupation groups: arts and design, computer and information technology, media and communication, transportation and material moving, construction and extraction. They are working here and there without permanence, medical insurance or pension provisions, like employer 401(k) contributions.

That is for starters and it is happening now. Then comes the apocalypse when millions of workers find themselves displaced by thinking machines. Think of what happened to elevator operators in cities when elevators were automated.

The first to go might be taxi drivers, some truck drivers, airline pilots and others in transportation. Already in Phoenix, you can ride in a robot taxi operated by Waymo, the Google self-driving car project. Truck makers, stirred on by potential competition from new entrants, like Tesla, are hard at perfecting autonomous intercity trucks.

To my mind, the issue is not whether but when. There are more than 3 million truck drivers on U.S. roads. Not all will be displaced by AI, but if 1 million go, there will be considerable downward pressure on wages.

Traditionally, and Savage points this out, automation has led to a surge in new, different jobs. Ned Ludd, who with his followers destroyed mechanical weaving machines in England in the early 1800s, was wrong. Mechanized weaving added far more related jobs than those lost.

But this time it could be different, warns John Raymont, chief strategy officer of Kurion, an advanced technology nuclear company. He says the difference is that automation heretofore has led to more products, and therefore more jobs. Artificial intelligence threatens to take away jobs without producing new products, which themselves produced new jobs.

Take the automobile production line: It led to more people being able to afford cars and more jobs maintaining and fueling those cars. It enhanced America’s growing prosperity.

So far, AI appears to be aimed directly at employment. In the way that cheap labor in Asia sucked manufacturing jobs out of the United States, so machines may take over skilled jobs from airline pilots to Uber drivers, Raymont says. Other jobs may still be safe, including plumbers, he says.

And it will not be just manual workers who will have their jobs taken over by wily computers. Accounting, tax preparing and auditing, money lending, loading and unloading ships and trucks will be done by machines guided by artificial intelligence. A ship, it is theorized, will be able to leave a U.S. port without the aid of seamen or dock workers and sail to Singapore, dock and unload autonomously.

Job displacement may have this opportunity: More leisure time in which people can play golf on greens maintained by thinking mowers, aerifiers and fertilizer spreaders. After they play, a machine may make them an extra dry martini at the club bar.

 

Photo: August 6, 2017 Mountain View/Ca/USA – Waymo self driving car cruising on a street, Silicon Valley. Editorial credit: Sundry Photography / Shutterstock.com

The King File: Future of Work, Euro Trains, the Grammys

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Work Is Not What It Was and It May Not Be Again

It used to be that when you left school or college, you sought to hook up with an employer who would offer you a whole bunch of goodies: things that were taken for granted then, like job security, health insurance and a defined pension.

You could work for, say, General Electric, AT&T or Marshall Field. And you’d be on a kind of employment plateau.

Those were the days when even well-paid union employees, like truck drivers, would reasonably count themselves as middle-class. They’d expect their children to do even better than they had.

But stagnant wages and disappearing benefits are booting millions out of the middle class. They can’t afford the genteel life anymore.

In today’s workplace, keep your resume burnished and your home in good repair, in case you need to downsize quickly. Damocles’ sword hangs over the head of every employee: It could fall in a merger, if production is moved to another state or offshore, or if your company tried for a leveraged buyout and sank under massive debt.

With just 10.7 percent of U.S. workers belonging to unions in 2017, according to the Bureau of Labor Statistics, things are not pretty for those who thought they would lead a life shielded from the buffets of the economy. Now no one is shielded — unless you are wealthy, in which case you’re likely to be one of those doing the buffeting. Or, you chose the security of government employment. That way you’re in a cocoon that private industry no longer offers.

At present, the enormity of this uncertainty in the workplace is concealed with the giddy stock market and full employment. But it’s there. When there’s a stock market correction or we have a recession (both of which history says are inevitable), the plight of working people will become more obvious. Also, the attendant plight of new retirees — more and more without pensions and relying, if they’re lucky, on 401(k) plans. They won’t have lifetime pensions, guaranteeing glitter in their golden years.

But worse may be to come. Meet the gig economy, where contract employment replaces formal employment: no employer medical plan, no paid vacation, no sick leave.

Hanging over all this gloom is the existential worry about artificial intelligence. One argument is that its predecessor, automation, always created more jobs than it cost. Mechanized woolen mills made cloth for the many. Production lines produced goods that more consumers could afford like cars and washing machines. Win-Win.

Artificial intelligence, though, threatens simply to replace workers not to make new products. Already, banks and some retailers are working to get people out of transactions, an indication of the workerless future.

 

Euro Trains Have Borrowed Pricing From Amtrak

While making a round-trip reservation from Brussels to London on the super-fast Eurostar, I find that it’s embraced one of the horrors of super-slow Amtrak: dynamic pricing. That’s the system where the cost of tickets is what the market will bear.

European trains, like Amtrak, have public subsidies. So the governments on both sides of the Atlantic are actually squeezing out people with limited budgets. Shame.

It seems to me if it’s the intent of government to subsidize transport, it should do so with an eye to the poor — with fixed pricing — not the rich.

 

This Was Not Your Grammy’s Grammys

Was I wrong in thinking the that the Grammys this year were strictly for the young? Bono and Sting looked decidedly uncomfortable.

There’s an age chasm between Bruno Mars listeners and, well, those of us who heretofore thought we were cool when we listened to Bono and Sting.

 

The Things They Say

“Before you judge a man, walk a mile in his shoes. After that who cares? He’s a mile away and you’ve got his shoes!” — Billy Connolly, Scottish comedian

Who’s Afraid of Regulation? Not Warren Buffett

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So Warren Buffett has bought himself a railroad: Burlington Northern Santa Fe, to be exact. Crafty fellow.

Buffett famously invests in easy-to-understand large companies with a strong competitive advantage that generate cash and above-average return on capital. He has not been dazzled by the computer age. Computers, though, have had a dazzlingly disruptive effect on one of his investments: The Washington Post Company, for which Buffett serves as a director.

By his own account, Buffett finds newspapering scads of fun, connecting with journalists. Because The Post Co. bought Kaplan, Inc., the educational services outfit, Buffett and other Post investors have been spared some of the pain that falling advertising and circulation have inflicted across the industry.

Even as he was enjoying newspapering, Buffett appears to have had his eye on more solid industries. In 2000, he paid $1.7 billion to acquire an 85-percent stake in utility MidAmerican Energy Holdings Company, and later acquired the rest. Now he is paying $26.3 billion to acquire all of Texas-based Burlington Northern Santa Fe.

It would appear that in these investments, these dull industrial cornerstones, Buffett has chosen government oversight over technological vulnerability.

Both utilities and railroads are government regulated and subject to the vagaries of public policy. But they are both necessary, and therein lies Buffett’s comfort factor. Electric utilities are not known for their gyrations, nor are railroads. Indeed, both have been largely shunned by hedge funds because they lack volatility.

Buffett, it would seem, is not balked by government or its impact, through regulation, on whole classes of businesses. Electricity companies are heavily regulated at the state and federal level–and in other ways, including pollution control, fuel mix and return on equity. Similarly railroad safety, service and return on equity are dictated by regulators.

Since the heady days of deregulation in the 1980s and 1990s, despite the conservative dialectic, the electric utility industry, in particular, has discovered regulation by the government to be both a burden and a godsend. Government stifles but it also succors.

Wall Street is conflicted about regulation. While it loves the security regulation brings to electric utilities, gas distribution companies and railroads, which makes their debt an attractive investment, it fears the extension of the government’s embrace to other industries and to itself. Wall Street would love, for example, to see the airlines back under the government’s wing–as would the carriers themselves.

While the political class is consumed with the machinations of Congress, and the activism of President Barack Obama, Buffett is tacitly declaring his apprehension about disrupting technologies: computers and their progeny, like the Internet and wireless communications. Buffet is voting for investments that cannot be moved to China and cannot, by today’s reckoning, be rendered obsolete by technology.

Washington is awash with analysts, pundits, reporters and strategists aggregating and disaggregating, dicing and slicing the smallest morsel of political change. Yet, since the end of World War II, technology has had as much claim on change as politics. The three great political events of this time have been China’s conclusion that communism and capitalism can abide together; India’s final realization that protectionism was holding it back; and the collapse of the Soviet Union. Did the end of the British Empire matter? Not really.

By stealth, technology has been changing the world, wiping out whole areas of endeavor and creating new ones. Thanks to the green revolution between 1950 and 1984, the world has been better fed. Thanks to the microprocessor, we have been gadgetized–from the way we enjoy music to the ease with which we stay in touch by telephone. Thanks to the jet engine, the world has been opened to all who can afford to fly. And thanks to new technologies, medicine posts successes daily.

But it is the computer that has changed everything, for good and otherwise. It is the computer that has robbed us of our privacy, but has put the great libraries of the world at our fingertips. It has made writers of us all, even while undermining traditional journalism.

So while we are parsing electoral tidbits, technology is the real shaping force loose in the world.

If you cannot embrace it, try and get to some safe, predictable high ground, like Buffett. He is known as the Oracle of Omaha for good reason. –For the Hearst-New York Times syndicate