Human advancement throughout history can largely be credited to our ability to invent machines that increase our productivity and efficiency. Those tools allowed us to overcome the physical limitations of the human body and that of the animals we used, and as a result, territories were conquered, societies reshaped, and the dream of economic prosperity became a reality for millions.
At the turn of the 19th century, the U.S. was a nation of farmers—39 percent of the population earned their livelihood through farming. The tractor was then introduced, resulting in profound changes such as the total replacement of work animals, consolidation of farms as seen in the increase in the average farm size from 60 to 200 hectares by the 1940’s. Furthermore, the percentage of the population working in farming dropped to under 2 percent by the end of the century.
“Peak Horse” and the Industrial Revolution
Interestingly, the population of horses has as well experienced a similar pattern of decline, but in a more dramatic way. Horse population in the U.S. peaked at 25 million just as the automobile started to take over as the primary mode of transportation.
Since then, the population of horses declined by almost 85 percent to around 3.6 million, according to a USDA census conducted in 2012. This severe demographic decline can be attributed directly to the loss of function and the utility of horses as the integral component of productivity.
On the other hand, human population and income levels, both flourished as more machines were integrated into the productivity chain. Prosperity in the 20th century was for the most part due to the industrial revolution brought about by mechanization, which made mass production possible and consequently fueled global trade.
The benefits of the industrial revolution were further compounded as the digital revolution ushered an explosion of knowledge creation and information sharing as never before experienced in human history. This overlay of the two types of technologies resulted in a net positive effect on the global economy, lifting billions of people out of poverty.
The digitization of hardware continues today, at a rapid speed, transforming our lives in profound ways. Take the average smartphone, for example. It is a powerful productivity tool that has more computing power than NASA did in 1969. But take away its connectivity to the internet, and it becomes just a piece of hardware that makes phone calls.
Singularity and the Fourth Industrial Revolution
The rapid integration of connected hardware, artificial intelligence (AI), and big data is bringing about a state of “technological singularity,” in which machines match and surpass human intelligence. The signs of this happening are all around us. In 1997, IBM’s “DEEPBLUE,” an artificially intelligent “supercomputer” beat Garry Kasparov, the world chess champion at the time in what was an unprecedented move for AI. A few years later, “Watson,” another IBM supercomputer was able to beat two champions in the game of Jeopardy by utilizing a four terabyte digital brain to access and analyze over 200 million pages of structured and unstructured data.
Not to be outdone, Google’s “DeepMind AlphaGo” supercomputer made history earlier this year when it beat the world champion in the ancient 3,000-year-old Chinese board game called “GO.” This event constituted a landmark achievement in the field of AI, as AlphaGo relied on teaching itself how to play the game rather than be fed all the probable combinations of every move. This self-learning process of Deepmind is called machine learning, which is a type of AI that teaches itself to learn and develop knowledge on its own in response to different data inputs. This breakthrough is nothing short of a technological revolution, the effects of which will have brilliant yet possibly dire consequences on humanity.
The Robots Are Coming
It is worth noting that the transportation industry employs about 3 million drivers in the U.S. and 70 million worldwide. With the deployment of machine learning and artificially intelligent robots accelerating in almost every industry, driverless cars will become mainstream soon. Big car manufacturers like GM, Fiat Chrysler, and Tesla are rushing to bring to market the first commercial models of their autonomous vehicles. Companies like Uber and Lyft, whose entire business ethos is to partner with individual (human) drivers to provide transportation to its customers, are leading the push for the commercialization of driverless cars. A primary motivation is to cut down on the portion of the fare paid to drivers which caused Uber to lose $1.27 Billion in the first half of 2016
Uber’s OTTO, a driverless truck has just made its first shipment across 125 miles within the state of Colorado. Such success will only accelerate the deployment of autonomous vehicles as they help companies boost profitability by cutting the cost of labor. Moreover, the fact that autonomous cars can potentially reduce road crashes by 90 percent, as stated in a report by McKinsey and Company, serves yet another motivation for companies to move towards driverless transport. As a result, job security in the transportation industry has reduced significantly.
Flying drones are another technology being integrated into civilian life. Amazon, the leading online retailer, is developing a fleet of aerial drones for faster and more frequent deliveries from its automated warehouses run by robots.
The restaurant business is getting invaded by robots as well. Pepe, Giorgio, Marta, and Bruno are not Italian chefs, but robots hard at work making Pizza at Zume Pizzeria in Mountain View, California. Another is busy making the perfect noodles at “Dazzling Noodles,” a restaurant in Shanzi province in Northern China. And if that is not impressive enough, Kawasaki of Japan has developed a robot that makes sushi and nigiri in under a minute. For the home kitchen, Moley Robotics have invented a home chef that can cook nearly 2,000 different and complex meals using 3D cameras and two robotic arms with over 100 sensors.
Robots and the Military
Robots are increasingly being deployed by armies around the world as the global geopolitical temperature rises with the resurgence of China as a military power, the new assertiveness of Russia, and nationalism roaring back in many leading democratic countries like the U.S. and U.K.
In addition to drones and other autonomous vehicles, there are new types of robots being deployed for military uses that will totally change the way wars will be fought. “BigDog” and “Cheetah” are two robots with the look and more importantly the dexterity of real animals. Invested by Boston Dynamics, a company owned by Google, BigDog is designed to carry 150 kgs at 4 miles per hour over rough terrain on legs, not wheels. Cheetah is a four-legged robot that runs at the incredibly fast speed of 45 km/h. Equip 1,000 Cheetahs with machine guns and it will become the perfect field soldier that knows no fear and does not bleed. In the event it gets destroyed, no flag draped caskets will be shown on TV and public opinion will not have the same level of outcry to stop wars, as is the case now with human casualties. One possible effect is smaller, but probably more lethal armies.
The U.S. Army has begun deploying robots in its ranks and is expected to shrink from 540,000 people to 420,000 by 2019.
Robotics, Politics, and Society
Unlike the single purpose equipment of the past, many of today’s robots are general purpose machines that often self-learn by watching. Baxter is one such robot that can replace almost any employee in an assembly line and costs only $25,000, a fraction of what a factory employee would cost in a developed country.
The CEO of China-based Foxconn, the largest contract manufacturer in the world said in a statement that he expects to deploy “Foxbots” at the rate of 30,000 per year. This development is particularly interesting as it is happening in China, the most populous country in the world and where near full employment has vital political importance.
The Bank of England estimates that up to 50 percent of the jobs in the U.S. and U.K. are at risk of being taken over by smart machines. The ratio is even more alarming in developing countries: 88 percent in Ethiopia, 77 percent in China, and 69 percent in India. Robots and AI will render millions of educated and skilled workers around the world obsolete, much like the horses of the early 1900s.
IBM’s Watson is now being deployed in the field of medicine to help with cancer diagnoses and treatment, as well as in the process of discovery in legal cases further shrinking the elite space where human intellectual capacity was undisputed.
Labor advocates won a victory in some U.S. states to raise the minimum wage to $15, and just as that happened, McDonald’s announced that it has successfully deployed robots in some of its restaurants and depending on the success, they plan to open 25,000 more robot-run restaurants, according to a CNN report. One thing is certain: McDonald’s will not be the only fast food restaurant to replace labor with robots, and as a result, 97 percent of the jobs in the fast food sector are at risk. While such transformation will be profitable for restaurants, it will have a serious adverse social effect on communities whose members depend on these low-skill “stepping stone” jobs.
Deployments of robots by various industries is just the latest episode in the eternal battle between capital and labor, however, for labor this might be its last. The digital divide and the global financial crisis have both deepened the gap between the wealthy and poor members of society in almost every country. The robotic revolution, however, will create new chasms that might forever be impossible to bridge. When people are unemployed for some time, they become unemployable for a long time due to skill atrophy. One solution is to re-train and re-skill, however with robots and AI, chances are no amount of retraining will qualify someone for a low skilled job as humans will be rendered obsolete for those level jobs.
As billions of people start to feel the pressure exerted by intelligent machines on employment opportunities and most certainly wages, despair and anger will rise, and politicians will find themselves looking for escape goats to either control or capitalize on that frustration.
Comparing the education level of those who voted for Brexit in the U.K. and Donald Trump in the U.S., such mass despair can be clearly identified. Nevertheless, what will become inevitably apparent to that electorate is that politicians will not be able to fulfill many campaign promises of better jobs and higher wages because it is technology, and not “the others” causing the state of creative destruction of which they are and will continue to be victims.
Governments around the world, regardless of the system of governance, will be forced to come up with new social programs to mitigate the inevitable tsunami of unemployment. One such program gaining popularity is the unconditional basic income (UBI), which is a fixed amount paid to people regardless of their work status, sufficient for subsistence. Such a program would cost $3.2 trillion, assuming a $10,000 UBI to all citizens in the U.S.
The dilemma here is that social programs cost money that governments will not have due to shrinking tax revenues resulting from high unemployment and slower economic growth. The timing could not have been worse, as many countries such as China, Japan and Greece have irrecoverably high debt-to-GDP ratios.
AI and the Future of Humanity
There is no doubt that Robots and AI will enable mankind to reach new frontiers never before thought possible. However, the encroachment is too rapid for us humans to objectively keep up with. Steven Hawkins explained this best as he compared the slow evolutionary process of humans limited by biology with that of machines learning from big data and advancing at the speed of Moore’s law, which suggests that devices using circuits double in processing speed every two years.
Humankind has come up with amazing achievements throughout its history, which now includes AI that thinks and acts for itself. The question becomes, could this be our last?
Amro Zakaria Abdu is a global markets’ consultant with 15 years of experience in the financial service sector.