On Automation

I was told a joke about a fellow, an accounting clerk to be specific, who had outsourced his own job to a fellow in India.  At the end of each day the clerk passed on the assignments he had received during the day to the Indian fellow and then went home.  The next morning when he arrived at the office the results were waiting for him.  For this service the clerk paid a small portion of his salary to the Indian.  The clerk did no work of his own. He had a lot of time freed up for other things.

The story is interesting because the outsourcing model is applied at the individual level not at the corporate level, as is currently the norm.   From the company’s perspective, it continues to get the results it expects.  However, shareholders might argue whether management is making efficient use of capital and suggest cutting out the middleman. This then becomes a discussion on who should realise the benefit; the clerk or the company?

This question has the potential to expose some broader social issues, but I expect only if a scale is reached that society as a whole is affected.  In the current state it is the company for the most part that realises the benefit, in part because they invest the capital. In our current working model, this makes sense.

But will the current working model continue or does it need to evolve?  When individuals are replaced by automation, for example robots displace human workers on an assembly line, these are often portrayed as business productivity improvements.  For the consumer, automation often brings improvements in quality and cost.  It is generally conceded that while individuals are affected, in the broader scope of things, new and better jobs are created, so in the balance, society as a whole benefits.

In a joint report by the Conference Board of Canada, CAVCOE and the Van Horne Institute [1], Automated Vehicles: The Coming of the Next Disruptive Technology, the authors lay out the impact of automating vehicles economically, socially, on infrastructure as well as transition scenarios and timelines.  The 72 page article is both interesting and thought provoking.  

There are a couple points raised by the authors which are striking.  First relates to job impact.  The report states that Automated Vehicles (AVs) will displace the tasks currently done by many people, over 600,000 to quote the report:

Direct employment displacement would include, but is not limited to:

• transport, truck, and courier service drivers (currently 560,000, or 1.5 per cent of the Canadian workforce)
• taxi drivers/chauffeurs (currently 50,000)
• bus drivers
• auto body repair
• auto insurance
• traffic police
• road safety professionals
• tow truck drivers
• driving instructors/trainers
• trauma surgeons
• critical care health staff
• medical staff involved in car crash victim rehabilitation
• health staff involved with organ and tissue donation
• parking attendants
• legal staff involved with auto collisions

The second point makes the argument that this deployment of AVs is imminent: 

The first generation of AVs is already with us. Google has already—as part of its “Chauffeur Project”—rolled out prototype AVs in California and elsewhere. These included adding AV technology to standard cars and custom-designed, small, two-seater electric vehicles. The government of the United Kingdom is promoting the testing of AVs in Milton Keynes, Buckinghamshire. Singapore is to start testing AVs on its public highways in 2015. The European Union (EU) has matured its research into the current CityMobil program to help develop AVs and has modified its treaty law to allow the introduction of AVs in Europe. Mercedes-Benz is moving, incrementally, toward the development of AVs: it already has demonstration vehicles capable of 99 per cent autonomous operation and commercially available vehicles that are 70 per cent autonomous. And the Cadillac division at General Motors is promising a “super cruise” technology in its 2017 models. The Cadillac technology will not only allow control of the car to be handed to a computer, but will also feature a “vehicle-to-vehicle technology.” The technology will allow Cadillacs to communicate with other vehicles and to predict, and avoid, highway hazards. Nissan is working on a range of AVs that it claims will be for sale sometime between 2020 and 2025. Tesla has already stated its intent to have cars that can “… drive from highway on-ramp to highway off-ramp …” in 2015. The State of Nevada has passed legislation to permit AVs on its highways. In Alberta, Suncor is operating an autonomous large dump truck in the oil sands. And Navya Technologies has launched the Navya, a fully autonomous electric shuttle for college campuses, airports, and other locations where there is a need for low-speed vehicles. 

These findings raise the point as to whether we can expect the social balance of job displacement and creation to be maintained?  Will new jobs be created in sufficient numbers to compensate for what appears to be a significant number of jobs being removed from the market? If not, then what is the social impact on employment, standard of living, etc.?  

Vehicles are not the only thing being automated.  Many tasks in business are being automated which leads to the question of whether the introduction of AVs is just the beginning of a series of such developments and if it is will there come a point where only the few will enjoy the traditional employment model; the vast majority of people needing to seek other means to occupy their time.  If so, how will these people be funded? Do there need to be changes in the distribution of benefits? All businesses need consumers who have disposable income.