"Automation" Is Still the Word Politicians Dare Not Speak

Buried at the bottom of a long New York Times piece by Nelson D. Schwartz on "The Decline of the Baronial C.E.O." is this passage (emphasis mine):

The staggering profitability of the tech giants provides their leaders with more than a little of the swagger the industrial executives once possessed.

In 1990, the revenues of Detroit's Big Three automakers totaled $250 billion while they employed 1.2 million people, according to a study by the McKinsey Global Institute.

Silicon Valley's top three companies in 2014 had almost the same revenues before adjusting for inflation — $247 billion — but with 137,000 employees, they required a work force just one-tenth the size.

That kind of efficiency adds up to huge profits, soaring stock prices, and few complaints from investors. Or as Brooks C. Holtom, a professor of management at Georgetown, put it, "If your stock is doing well, your job is safe."

CEO jobs are safe because of the "efficiency" that means the same corporate revenues sustain one-tenth the number of jobs they did 25 years earlier. In other words: CEOs have a major incentive to automate.

And it's not just to keep their jobs, of course. A huge portion of the revenue saved by workforce reductions has been redirected to CEO salaries, which have grown 90 times faster than workers' pay since 1978.

A reward for overseeing increased efficiency, natch.

As I've noted previously, when we hear a CEO talk about "efficiency," we know that it means one of two things (or both):

1. The "speedup," which is the ubiquitous corporate practice of not filling jobs when people leave and simply redistributing their work among remaining staff, who aren't compensated for the additional duties;

2. Automation, which is typically associated with the image of a giant robot in an automotive plant doing the job a person, or multiple people, used to do, but is much more ubiquitous.

Manufacturing jobs have indeed been lost to automation, but additionally: Retail jobs are being lost to automation via online shopping. Service jobs are being lost to automation via self-serve kiosks, even in restaurants, where touch-screen order interfaces are popping up where waitstaff used to be. Operators have been replaced with automated directories. Bank tellers have been replaced with ATMs and online banking. Cashier jobs are being lost to self-checkouts. Opportunities to make one's living as an instructor — a piano teacher, say — have precipitously dwindled with the advent of online (and often free) instruction videos.

And self-piloting vehicles will destroy entire sectors: Trucking, municipal driving jobs (garbage collection, street sweeping, leaf collection, snow plowing), delivery, driving services (taxis, Uber, Lyft).

This is the reality of our past, it is our reality now, and it is the reality of our future.

The jobs lost to automation over the past decades, and the jobs that will continue to be lost at an accelerating rate, are not "coming back." This is as serious, if not even more serious, a problem than wealth inequality. They are also inseparable problems. Any economic analysis at this point which isn't urgently and centrally addressing automation isn't a serious economic analysis at all.

Automation is coming for our jobs. There is no reversing the trend. There is only acknowledging this reality and crafting policy that reflects it.

Starting, immediately and loudly, with meaningful proposals for a universal basic income.