Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, How the 5th US Revolution Begins and About the Author.  Many entries are formatted as conversations. Characters appear in a number of entries, with many entries building on previous conversations.  

Occasionally I do a “sense check” about the likelihood of a Revenge Revolution.  Entry #318 is the most recent “sense check.”  One more note — sometimes I write about another topic that does not quite fit the theme of the blog.  Those comments are available on the page titled “JRD Thoughts and Comments” as well as “Tech Tsunami”, which has more articles about how technology might affect US…and add a dimension to the Revenge Revolution.

Background to Technology Tsunami Series. Thought it might be worthwhile to take a break from all the craziness in Washington and discuss other issues that likely will contribute to the Revenge Revolution. A key issue that seems to be getting less attention than it deserves….maybe because of all the noise emanating from the Trump White House…is how the implementation of technology will change the family earnings structure in the US.

We’ve seen some of the changes already, with the reduction in manufacturing jobs and the stagnation of wages for a large segment of the population. In my view the changes so far are just a small taste of what is to come. The next several blog entries…and I don’t know how many at this point…will focus on what I’m labeling the coming “technology tsunami.” The first of the entries, which follows, is a bit long but tries to set the stage.

There are already numerous early warning signs of the tsunami. An example – the announcement by General Motors in November 2018 of its intent to close five (5) plants in North America. Another warning sign is a story in the New York Times about a robotic arm playing the piano. While a robot playing a piano may seem like a bit of a novelty, think about the implications. The more dexterous robots become, the more robots can perform tasks of people who are highly skilled. Robots in warehouses and welding or painting in cars/trucks are commonplace. Those tasks are fairly straight forward compared to cooking or performing surgery or a host of other tasks.

As noted in this entry, over the centuries societies have coped with implementation of new technologies. Some societies have adopted new technologies and succeeded; others did not adopt new technologies and fell behind.  An example — in 1910, GDP per capita in Argentina was about 80% of US GDP per capita.  By 2010, 100 years later, GDP per capita in Argentina had fallen to about 30% of US GDP per capita.

Adopting successfully is very difficult. There are a couple of interesting books about adopting new technologies that we’ll discuss in a later entry. For now let’s get started. As you read, keep in mind how the disruption caused by adopting new technologies might compound societal problems currently facing the US. Numerous factors point to another revolution in the US – the technology tsunami could accelerate the Revenge Revolution and make it worse. And, yes, Mrs. Lincoln, enjoy the play.

Entry Begins

After General Motors announced plans to close five (5) plants in North America (November 2018), I was asked by several friends and colleagues for my opinion of the merits of the decision. While I had no inside information, based on my experience at GM and additional analysis, I concluded GM made the correct decision and should be congratulated.

To explain my logic in more detail, I wrote a couple of informal articles and published links on Facebook. The articles included the term “technology tsunami,” which I thought might help explain some of GM’s rationale for closing the plants…and why GM’s decision might portend what’s ahead for other companies. (GM had additional reasons for the closings. Links to articles on Tech Tsunami page.)

Reaction to the term “technology tsunami” seemed to beg for more explanation. So, here goes. I selected the term “technology tsunami” because the characteristics of a tsunami seemed to be a good proxy for how the wave of artificial intelligence (AI), increased use of robots, implementation of the blockchain, and other technologies will affect employment in the US. The effect will not be limited to the manufacturing and some service sectors but include many white-collar professionals (GM, for example, laid off more salaried  white-collar staff, than hourly manufacturing workers.)

First let’s look at the sequence of a tsunami. The start is often an earthquake or volcanic eruption deep in the ocean. The energy from that quake is transferred in the form of a series of powerful ocean waves. In the open ocean, the change in the wave pattern caused by the earthquake is not necessarily apparent. To the naked eye, tsunami waves appear relatively normal.

The strength of the waves becomes more apparent as waves move closer to shore. As the waves start to come ashore, the waves are compressed. The more gradual the slope of the shoreline, the more compression.

And there is not just one wave that is compressed and hits the shore, but a series of waves. The waves are powerful and of such height that virtually everything at or near the shoreline is completely destroyed. The waves continue inland, causing significant damage. A tsunami usually is more powerful and destructive than the surge associated with a hurricane.

An usual characteristic of a tsunami is how it affects the waterline preceding its arrival. As the tsunami gets closer to shore, the water at shore’s edge recedes. The shoreline looks as if there is an exaggerated low tide. This phenomenon might last several minutes. Then, the waterline changes quickly and drastically as repeated high and powerful waves come ashore, destroying virtually everything.

With that picture in mind, let’s examine how a technology tsunami might affect employment in the US. In my view, the earthquake has already occurred that will cause the technology tsunami. The energy from that quake has been transferred to form of a series of large and destructive waves. And those waves are headed toward the US shore. Warning signs of the tsunami are becoming more evident at the shoreline as the waterline has begun receding.

The US shoreline is filled with people. Many at the shore still work in manufacturing and service industries. However, few at the shore seem to understand the implication of the receding water line and even fewer take action to avoid the pending disaster. As the waves roll closer to shore, the beach remains filled with people.

In the next few moments – for this analysis consider next “few moments” as next “few years” – the pending disaster becomes apparent. The waterline begins moving ashore rapidly as the first of a series of giant waves becomes visible. The people at the shore – those with limited education and skills – try to escape, but it is too late and waves overwhelm them.

The powerful waves continue inland, destroying many long-standing structures, once thought invincible. Much is lost and chaos ensues for those who survive.

Am I overreacting to the potential impact of a technology tsunami? Is a technology tsunami even possible? Or, as a couple of people have suggested, am I being like “Chicken Little”?

My concern about a technology tsunami has less to do with whether AI will become smarter than humans and more to do with the potential impact on the stability of society. How many lower-skilled, semi-skilled and even skilled blue and white-collar jobs will technology replace?

Trying to stop implementation of technology is foolhardy. Depending on when such a stop-technology approach was implemented, today we might be travelling by horse and buggy and living without electricity, telephones, tv/radio, computers, internet, etc.

And yes, I agree that societies have survived major technology disruptions in the past. But transitions to new technologies have rarely, if ever, been smooth. Even worse, countries that did not transition to new technologies became also-rans.

During the technology tsunami, what is likely to happen to societal stability in the US? How will people react who are replaced by technology? As middle-class jobs continue to be eliminated…and many new jobs are at lower pay, if available at all…will people sit idly by? (When formulating your answer don’t be misled by the unemployment rates in recent months. Look at constant-dollar median incomes over time compared to GDP per capital. Income has not kept up with productivity. Also significant wealth has transferred toward the very top. The longer-term trend is a much smaller middle class with less wealth accumulation.)

If a technology tsunami seems possible, then what are we…societal we…doing to prevent a likely social upheaval that follows the tsunami? As best I can tell, we are doing nothing of substance. Policies of the Trump Administration seem to be focused on preventing adoption and even overturning technology rather than planning how to manage the transition.

In a way, the logic for why we should prepare for a technology tsunami is similar to the logic of why we should make efforts to prevent further global warming. Who’s right about the cause of accelerated global warming does not matter. If global-warming deniers are correct and man has contributed virtually nothing to global warming, the consequences are the same…and the consequences are not good. By doing something, then there’s a chance to reduce the negative effects.

Since we have a good idea of the effect of a technology tsunami, how do we start preparing? Maybe the first step should be to look at the 1930’s. In response to widespread unemployment (at least 25%), reduced net worth among most families, and no clear prospect for an economic turnaround, FDR and Congress implemented programs to create jobs. Creating jobs had a twofold effect: (i) putting money into people’s pockets so they could begin buying again; (ii) allowing families to regain self-respect.

One can argue about the efficacy of specific New Deal programs. However, there should be little argument that these programs helped bring stability back to US society.

Part of the New Deal not often discussed is the effort to increase participation in public education. During the 1930’s, many grammar and high schools were built and students encouraged to complete high school.

The efforts resulted in a sharp increase in the percentage of the population graduating from high school. The increase in percent graduating from high school continued until the 1970’s when the rates plateaued.[1]

Emphasis on education continued after WWII with the GI Bill of Rights and then with availability of low-cost loans encouraging more students from lower- and middle-income families to attend college.

The lesson of these programs for today? Existing and emerging technologies require more math/analytical skills to utilize capabilities of the technologies. With the need for more math/analytic skills…and the risk of becoming an also-ran country by not adopting the technologies…what actions do we take? How does US society get more people educated, especially those on the shore unaware of the pending technology tsunami?

Following are some ideas. You’ll likely look at the list and say, “What’s so innovative about the list? I’ve heard these ideas before.” And, you’re right. The ideas are not new…but you know what? We’re not implementing them, and in some cases we seem to be regressing.

The list is intended to start the discussion:

  1. Help society understand that expenses for public education are investments, not merely costs. Investments may take time to payback but result in a benefit that spans generations.
  2. Increase pay for…and respect for teachers. Make the qualifications and salaries for teachers competitive with, and possibly slightly above, the private sector.
  3. Reinstitute more technical training in high schools. Almost everyone agrees not everyone is suited for college. Not attending college does not mean one does not have valuable skills. Far from it. The public schools should provide everyone an opportunity for training in how to use, leverage and maintain technology skills. At one time “technical training” was common in high schools. Time for it to return.
  4. Make loans for college affordable with a provision to “earn-out” the loan over a reasonable period. Unlike today, make compliance for the earn-out provision easy to understand and execute. Provide assistance to the participant – not everyone is an expert at filling out government paperwork. Encourage people to become teachers. Don’t discourage them with onerous penalties for slight mistakes in completing paperwork.
  5. Cut back, or eliminate private charter schools. Yes, all organizations need fixing over time. Public education is no exception. But charter schools are not necessary to fix problems in public education. Charter schools destroy the very foundation of public education…and operate with far less accountability. The trend toward charters needs to stop and charters eliminated.
  6. Create meaningful education programs for older workers. The claim by some that “I’m too old to learn” is an excuse, not a reason. My experience has been many older people are embarrassed to ask for help. When assistance is framed the right way, it is rare that someone turns down the opportunity to learn. We…again societal we…need to be flexible in how we approach teaching students, whether the student prospect is in grammar school or a grandparent.
  7. Implement meaningful education programs and works-skills programs in prisons. Incarceration is incredibly expensive. While different studies include different amounts for overhead and other costs, the least amount of cost per year to incarcerate someone is roughly the same as tuition, room and board at a state university. In many studies, the cost is multiples higher than tuition, room and board. Incarceration without rehabilitation is wasted money. Educating prisoners and having prisoners do meaningful work while incarcerated seems to be “common sense.”

How do we implement some of these ideas? More in the next article. Stay tuned.

[1] 120 Years of American Education: a Statistical Portrait, US Department of Education, 1993.

Links to articles re GM Plant Closings