Special Report: Automation 6/25/16

Article: "Automation - the return of the machinery question"

Automation has been a concern since the Industrial Revolution. David Ricardo from 1821: “The substitution of machinery for human labor renders the population redundant” - this is the Machinery Question. Now, after decades of overhype, AI is actually starting to dramatically improve. Study by Frey and Osborne (2013) says that 47% of all jobs in America are capable of being substituted by “computer capital”. Further developments like self-driving cars are estimated to add $2 trillion per year in productivity savings to the world economy.

AI advances come through a process called “deep learning” in which neural networks are created and then the machine is given a chance to learn on its own as opposed to being explicitly programmed. In supervised deep learning, the machine is given labelled data and learns how to make the identification correctly. Example is the ImageNet challenge - millions of labeled images. Humans can match the labels correctly 95% of the time; old AI about 75%. New deep learning AI at 96% - better than humans. Unsupervised deep learning, of which Google Brain is an example, let the machine look at millions of unsorted, unlabeled examples and let the machine find patterns and assign categories. Supervised deep learning was used to create “Enlitic” - a program for medical diagnoses based on images (x-rays, radiology etc.).. Enlitic has zero percent false negatives (missing a problem) compared to 7% for humans.  

Which jobs are vulnerable to automation? Old automation distinguished between manual and cognitive work. New AI based automation distinguishes between routine and non-routine work. In the Enlitic example, AI might be able to replace the radiologist but probably not the secretary. Historically, automation has created more jobs than it has destroyed. Ex: ATM’s mean banks need fewer tellers. But fewer tellers means lower costs per branch which allows for more branches to be built and more tellers overall to be employed. Work is fluid, not finite and fixed. Basic income may help get us through the rough patch of AI job destruction.