When I speak to students at Universities about entrepreneurship and what I am anticipating for the future, we eventually talk robots, artificial intelligence and machine learning. Those three things are going to put a lot of people out of jobs. JP Morgan is now using software to do things it took lawyers 360,000 hours to do. Bloomberg writes,
The program, called COIN, for Contract Intelligence, does the mind-numbing job of interpreting commercial-loan agreements that, until the project went online in June, consumed 360,000 hours of work each year by lawyers and loan officers. The software reviews documents in seconds, is less error-prone and never asks for vacation.
JPMorgan’s total technology budget for this year amounts to 9 percent of its projected revenue — double the industry average, according to Morgan Stanley analyst Betsy Graseck.
The finance industry is one industry that is always on the cutting edge of innovation for a lot of things. There is still a lot to be done-but they innovate in product creation and around the edges. Finance has always been very competitive, although Dodd-Frank has limited competition. Other industries are innovating too.
Most people go to higher education thinking they will be above the fray of innovation. They assume that the first jobs to be innovated out of existence will be factory jobs, or minimum wage jobs. That may be the case too.
You go to college to learn how to critically think. You go to start to develop a network. You go to learn more about yourself and get exposed to lots of ideas. You learn how to believe in yourself. You go to learn principles-not hard and fast rules. When you learn how to critically think based on principles you have, you are flexible. You can adapt.
Some venture capitalists are thinking about this and have started a conversation around having basic income. Others are starting to examine tax policy to see if they can use it to create different incentives or a stream of transfer payments to displaced workers.
My gut reaction is both tactics are incorrect.
- Basic income can be instituted using earned income tax credits. Having a much flatter more consumption tax based system instead of the current progressive tax system we have today will also help.
- If the government taxes robots, we will get less of them. Should we have taxed dishwashers back when they were invented?
Re-training is going to be hard to do. How do you retrain buggy whip workers for an auto industry?
The change is going to hit us much faster than people think. We are just at the beginning of the hockey stick moment. It’s going to revolutionize everything. The place where this sort of technology should be implemented first is in government. Our governments are going to be able to lay off hundreds of workers. The last calculation I saw showed 22 million people working in government or government related jobs not affiliated with the Defense Department. Changing can save us trillions in tax dollars.
We need to gore the sacred cow that is big government. It’s sloth-like and doesn’t move fast enough. It is surrounded by hubris. Big government exists to perpetuate big government, not to benefit it’s stakeholders. At least with most corporations, you can choose not to use them. Even companies that have the lion’s share of a market. If you don’t want to use Google for choice, there are other search engines you can use. As a matter of fact, if the world switched from Google to another search engine, Google’s main profit driver would die-hurting the company pretty badly.
Are we all going to be artists or service providers? No, the world of work is going to change. The problem is no one really can speculate on what jobs will be created by the new technology. That creates fear because of the uncertainty. Here is a tweet from today the University of Illinois pumped out:
— U of IL System (@UofILSystem) March 1, 2017
This revolution is broad based, and affects every single industry and job.
Since the election, I have seen some articles where Silicon Valley feels some guilt about the things they are investing in. They shouldn’t. Instead, we need to be looking at ways to invest more. The same programs that are going to displace workers can also use artificial intelligence to educate people and retrain people.
There are basic human needs that always need to be met. They all won’t be met by machines or computer programs