Economics of Technology – Page 8

Robots Free Humans for More and Better Jobs

(p. A8) For companies, choosing the appropriate tasks to automate is important. Auto maker BMW AG automated some of the physical labor at the Spartanburg plant in South Carolina while retaining tasks involving judgment and quality control for workers.
Robots fit black, soundproofing rubber tubes to the inner rim of car doors, a task once done entirely by hand, on the more than 5,000 or so car doors that pass through the production line each day. Human workers do final checks on the tube’s placement. The division of labor speeds up the process.
Since BMW introduced this and other automated processes over the past decade, it has more than doubled its annual car production at Spartanburg to more than 400,000. The workforce has risen from 4,200 workers to 10,000, and they handle vastly more complex autos–cars that once had 3,000 parts now have 15,000.
Being spared strenuous activities gives workers the time and energy to tackle more demanding and creative tasks, BMW said in a statement.
James Bessen, an economist who teaches at Boston University School of Law, said automation like that at the Spartanburg plant has enabled a huge increase in the quality and variety of products, which help spur consumer demand. BMW’s share of luxury-car sales in the U.S. has risen sharply, with over 300,000 cars sold last year compared with just over 120,000 in 1997, company figures show.
Tesla Inc., by contrast, has struggled with production of the Model 3 car at its Fremont, Calif., plant after its use of robots got out of balance. Undetected errors in parts built by robots caused bottlenecks in production, meaning it could build only 2,020 cars a week compared with the 5,000 it originally promised, according to the company.
Analysts at investment research firm Bernstein said Tesla automated welding, paint and body work processes, as other manufacturers have done, but also automated final assembly work, in which parts, seats and the engine are installed in the car’s painted shell. Errors in this work caused production bottlenecks. “Automation in final assembly doesn’t work,” said analyst Max Warburton.
“Yes, excessive automation at Tesla was a mistake…Humans are underrated,” wrote Tesla CEO Elon Musk in a tweet last month.
. . .
At an aggregate level, however, the jobs created by automation outnumber those that are being destroyed, according to analysis by the Massachusetts Institute of Technology’s David Autor and Utrecht University’s Anna Salomons.

For the full story, see:
William Wilkes. “Big Companies Fine-Tune The Robot Revolution.” The Wall Street Journal (Tuesday, May 15, 2018): A1 & A8.
(Note: ellipsis between paragraphs, added; ellipsis internal to paragraph, in original.)
(Note: the online version of the story has the date May 14, 2018, and has the title “How the World’s Biggest Companies Are Fine-Tuning the Robot Revolution.”)

More of James Bessen’s views on these issues, can be found in his discussion of ATMs in:
Bessen, James. Learning by Doing: The Real Connection between Innovation, Wages, and Wealth. New Haven, CT: Yale University Press, 2015.

The analysis by Autor and Salomons, mentioned above, appears in:
Autor, David, and Anna Salomons. “Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share.” In Brookings Papers on Economic Activity, Feb. 27, 2018.

Spreadsheets Created More and Better Jobs Than They Destroyed

Source of graph: online version of the WSJ article quoted and cited below.

(p. A2) Whether truck drivers or marketing executives, all workers consider intelligence intrinsic to how they do their jobs. No wonder the rise of “artificial intelligence” is uniquely terrifying. From Stephen Hawking to Elon Musk, we are told almost daily our jobs will soon be done more cheaply by AI.
. . .
Until the 1980s, manipulating large quantities of data–for example, calculating how higher interest rates changed a company’s future profits–was time-consuming and error-prone. Then along came personal computers and spreadsheet programs VisiCalc in 1979, Lotus 1-2-3 in 1983 and Microsoft Excel a few years later. Suddenly, you could change one number–say, this year’s rent–and instantly recalculate costs, revenues and profits years into the future. This simplified routine bookkeeping while making many tasks possible, such as modeling alternate scenarios.
. . .
The new technology pummeled demand for bookkeepers: their ranks have shrunk 44% from two million in 1985, according to the Bureau of Labor Statistics. Yet people who could run numbers on the new software became hot commodities. Since 1985, the ranks of accountants and auditors have grown 41%, to 1.8 million, while financial managers and management analysts, which the BLS didn’t even track before 1983, have nearly quadrupled to 2.1 million.

For the full commentary, see:
Greg Ip. “CAPITAL ACCOUNT; We Survived Spreadsheets; We’ll Survive AI.” The Wall Street Journal (Thursday, August 3, 2017): A2.
(Note: ellipses added.)
(Note: the online version of the commentary was updated Aug. 2, 2017, and has the title “CAPITAL ACCOUNT; We Survived Spreadsheets, and We’ll Survive AI.”)

AI “Will Never Match the Creativity of Human Beings or the Fluidity of the Real World”

(p. A21) If you read Google’s public statement about Google Duplex, you’ll discover that the initial scope of the project is surprisingly limited. It encompasses just three tasks: helping users “make restaurant reservations, schedule hair salon appointments, and get holiday hours.”
Schedule hair salon appointments? The dream of artificial intelligence was supposed to be grander than this — to help revolutionize medicine, say, or to produce trustworthy robot helpers for the home.
The reason Google Duplex is so narrow in scope isn’t that it represents a small but important first step toward such goals. The reason is that the field of A.I. doesn’t yet have a clue how to do any better.
. . .
The narrower the scope of a conversation, the easier it is to have. If your interlocutor is more or less following a script, it is not hard to build a computer program that, with the help of simple phrase-book-like templates, can recognize a few variations on a theme. (“What time does your establishment close?” “I would like a reservation for four people at 7 p.m.”) But mastering a Berlitz phrase book doesn’t make you a fluent speaker of a foreign language. Sooner or later the non sequiturs start flowing.
. . .
To be fair, Google Duplex doesn’t literally use phrase-book-like templates. It uses “machine learning” techniques to extract a range of possible phrases drawn from an enormous data set of recordings of human conversations. But the basic problem remains the same: No matter how much data you have and how many patterns you discern, your data will never match the creativity of human beings or the fluidity of the real world. The universe of possible sentences is too complex. There is no end to the variety of life — or to the ways in which we can talk about that variety.
. . .
Today’s dominant approach to A.I. has not worked out. Yes, some remarkable applications have been built from it, including Google Translate and Google Duplex. But the limitations of these applications as a form of intelligence should be a wake-up call. If machine learning and big data can’t get us any further than a restaurant reservation, even in the hands of the world’s most capable A.I. company, it is time to reconsider that strategy.

For the full commentary, see:
Gary Marcus and Ernest Davis. “A.I. Is Harder Than You Think.” The New York Times (Saturday, May 19, 2018): A21.
(Note: ellipses added.)
(Note: the online version of the commentary has the date May 18, 2018.)

Plenty of Good Blue-Collar Jobs

(p. A1) ELKHART, Ind.–The self-proclaimed RV capital of the world gives a glimpse of what the American economy looks like when operating at full tilt.
High-school students around here skip college for factory jobs that offer great pay and benefits. For-hire signs sprout like roadside weeds. And workers are so flush that car dealers can’t keep new pickups on the lot.
At the same time, the strains are showing. Employers can’t hang on to employees, and house prices are zooming. The worker shortage prompted a local Kentucky Fried Chicken restaurant to offer $150 signing bonuses. A McDonald’s failed to open for lunch last fall because managers couldn’t corral enough hands at $8 an hour to serve the lines waiting at the door.
No place in the U.S. has seen a labor-market turnaround like this metropolitan region of 110,000 workers, a mix of blue-collar whites, Mexican immigrants and Amish. “It’s like 1955,” said Michael Hicks, a Ball State University economist. “If you show up and have minimal literacy skills, you can find a job here.”

For the full story, see:
Bob Davis. “Economy’s Future Plays Out in Rust Belt.” The Wall Street Journal (Friday, April 6, 2018): A1 & A9.
(Note: the online version of the story was updated April 13 [sic], 2018, and has the title “The Future of America’s Economy Looks a Lot Like Elkhart, Indiana.”)

Google Further Reduces Small Payments to Content Creators

YouTube is a wholly-owned subsidiary of Google.

(p. A15) SAN FRANCISCO — The authorities believe a woman who shot three people at YouTube’s headquarters before killing herself on Tuesday [April 3, 2018] was angered by the social media outlet’s policies.
While the police did not specifically say what those policies were, they likely had to do with a concept called “demonetization.”
. . .
One of those creators was Nasim Najafi Aghdam, the woman the police said had shot YouTube employees in San Bruno, Calif. She frequently posted videos to several YouTube channels and had become increasingly angry over the money she was making from them.
“My Revenue For 300,000 Views Is $0.10?????” Ms. Aghdam wrote on her website, while calling YouTube “a dictatorship.”
. . .
Video creators take a share of the money from ads running before or alongside their videos. But YouTube has been raising the bar on qualifications for running ads.
Last April, the company said it would set a requirement for 10,000 cumulative lifetime views before allowing videos to gain ads. In January, the company raised that requirement to 4,000 hours of watch time in the past year and 1,000 subscribers.

For the full story, see:
NELLIE BOWLES and JACK NICAS. “YouTube Complaints From Attacker Echoed Fight Over Ad Dollars.” The New York Times (Thursday, April 5, 2018): A15.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date APRIL 4, 2018, and has the title “YouTube Attacker’s Complaints Echoed Fight Over Ad Dollars.”)

Silicon Valley Warms to Trumps Lower Taxes and Deregulation

(p. B1) SAN FRANCISCO — Two days after Donald J. Trump won the 2016 election, executives at Google consoled their employees in an all-staff meeting broadcast around the world.
“There is a lot of fear within Google,” said Sundar Pichai, the company’s chief executive, according to a video of the meeting viewed by The New York Times. When asked by an employee if there was any silver lining to Mr. Trump’s election, the Google co-founder Sergey Brin said, “Boy, that’s a really tough one right now.” Ruth Porat, the finance chief, said Mr. Trump’s victory felt “like a ton of bricks dropped on my chest.” Then she instructed members of the audience to hug the person next to them.
Sixteen months later, Google’s parent company, Alphabet, has most likely saved billions of dollars in taxes on its overseas cash under a new tax law signed by Mr. Trump. Alphabet also stands to benefit from the Trump administration’s looser regulations for self-driving cars and delivery drones, as well as from proposed changes to the trade pact with Mexico and Canada that would limit Google’s liability for user content on its sites.
Once one of Mr. Trump’s most vocal opponents, Silicon Valley’s technology industry has increasingly found common ground with the White House. When Mr. Trump was elected, tech executives were largely up in arms over a leader who espoused policies on immigration and other issues that were antithetical to their companies’ values. Now, many of the industry’s executives are growing more comfortable with the president and how his (p. B5) economic agenda furthers their business interests, even as many of their employees continue to disagree with Mr. Trump on social issues.
. . .
. . . quietly, the tech industry has warmed to the White House, especially as companies including Alphabet, Apple and Intel have benefited from the Trump administration’s policies.
Those include lowering corporate taxes, encouraging development of new wireless technology like 5G and, so far, ignoring calls to break up the tech giants. Mr. Trump’s tougher stance on China may also help ward off industry rivals, with the president squashing a hostile bid to acquire the chip maker Qualcomm this month. And Mr. Trump let die an Obama-era rule that required many tech start-ups to give some workers more overtime pay.
Mr. Trump “has been great for business and really, really good for tech,” said Gary Shapiro, who leads the Consumer Technology Association, the largest American tech trade group, with more than 2,200 members including Apple, Google, Amazon and Facebook.
Mr. Shapiro said that he had voted for Hillary Clinton, Mr. Trump’s opponent, in 2016, but that he and many tech executives had come around on Mr. Trump. While they disagree with him on immigration and the environment, they have found areas where their interests align, like deregulation and investment in internet infrastructure.
“This isn’t Hitler or Mussolini here,” Mr. Shapiro said. And even though the president’s new tariffs on steel and aluminum could hurt American businesses and consumers, “disagreement in one area does not mean we cannot work together in others,” Mr. Shapiro said. “Everyone who is married knows that.”

For the full story, see:

JACK NICAS. “Silicon Valley, Wary of Trump, Warms to Him.” The New York Times (Saturday, March 31, 2018): B1 & B5.
(Note: ellipses added.)
(Note: the online version of the story has the date MARCH 30, 2018, and has the title “Silicon Valley Warms to Trump After a Chilly Start.”)

Amazon Hires Thousands of Low-Tech Workers

(p. B1) TROMEOVILLE, Ill. — Brandon Williams arrived at an Amazon fulfillment center here, about an hour outside of Chicago, around 7:30 a.m. on Wednesday [August 2, 2017], one of thousands across the country who turned up for the company’s first Jobs Day. While he appeared to wilt slightly during the five hours he waited before an M.C. summoned him for a tour, his enthusiasm did not wane.
“What’s not great about a company that keeps building?” he said, seated in a huge tent the company erected in the parking lot as a kind of makeshift waiting room.
The event was a vivid illustration of the ascendance of Amazon, the online retail company that, to a far greater extent than others in the tech industry, has a seemingly insatiable need for human labor to fuel its explosive growth.
Like other tech giants, Amazon is recruiting thousands of people with engineering and business degrees for high-paying jobs. But the vast majority of Amazon’s hiring is for what the company calls its “fulfillment network” — the armies of people who pick and pack orders in warehouses and unload and drive delivery trucks, and who take home considerably smaller incomes.
The event on Wednesday, held at a dozen locations including Romeoville, Ill., was intended to help fill 50,000 of those lower-paying positions, 40,000 of them full-time jobs.
Those high-low distinctions did not seem to bother the attendees of the jobs fair, many of them united in the conviction that Amazon represented untapped opportunity — that a foot in the door could lead to a career of better-compensated, more satisfying work, whether in fulfillment, I.T., marketing or even fashion.
Mr. Williams, a military veteran studying computer network security at a nearby community college, said he hoped to eventually work his way up to an I.T. job with Amazon. But even those whose ambitions were more in line (p. B7) with the vast majority of available jobs could not hide their excitement.
. . .
Arun Sundararajan, a professor of information, operations and management sciences at New York University’s Stern School of Business, said Amazon’s employment needs are unique among tech companies.
. . .
“While the digital disruption is destroying the traditional retail business model,” Dr. Sundararajan said, “the Amazon model that replaces it will continue to live in the physical world and require human labor for the foreseeable future.”

For the full story, see:
NOAM SCHEIBER and NICK WINGFIELD. “Amazon’s Clear Message: Hiring.” The New York Times (Thursday, August 3, 2017): B1 & B7.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the story has the date AUG. 2, 2017, and has the title “Amazon’s Jobs Fair Sends Clear Message: Now Hiring Thousands.”)

Blockchain Could Give People “Ownership of Their Own Data”

(p. B1) The first blockchain was created in 2009 as a new kind of database for the virtual currency Bitcoin, where all transactions could be stored without any banks or governments involved.
Now, countless entrepreneurs, companies and governments are looking to use similar databases — often independent of Bitcoin — to solve some of the most intractable issues facing society.
“People feel the need to move away from something like Facebook and toward something that allows them to have ownership of their own data,” said Ryan Shea, a co-founder of Blockstack, a New York company working with blockchain technology.
The creator of the World Wide Web, Tim Berners-Lee, has said the blockchain could help reduce the big internet companies’ influence and return the web to his original vision.
. . .
(p. B4) Blockstack has built a way to record the basic details about your identity on a blockchain database and then use that identity to set up accounts with other online projects that are built on top of it.
The animating force behind the project is that users — rather than Blockstack or any other company — would end up in control of all the data they generate with any online service.
Blockstack is one of several blockchain-based projects hoping to create a new generation of online services that don’t rely on having unfettered access to our personal information.
The idea has gained enough steam that in the days after news of Facebook’s relationship with Cambridge Analytica broke, Twitter was filled with people calling for blockchain-based alternatives.

For the full story, see:

NATHANIEL POPPER. “Tech’s Answer For Security: Blockchain.” The New York Times (Monday, April 2, 2018): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 1, 2018, and has the title “Tech Thinks It Has a Fix for the Problems It Created: Blockchain.”)

Dockless Scooter Startups Follow Uber in Asking Regulators for Forgiveness Instead of Permission

(p. B1) Electric scooters have arrived en masse in cities like Los Angeles, San Francisco and Washington, with companies competing to offer the dockless and rechargeable vehicles. Leading the pack is Mr. VanderZanden’s Bird, with rivals including Spin and LimeBike. The start-ups are buoyed with more than $250 million in venture capital and a firm belief that electric scooters are the future of transportation, at least for a few speedy blocks.
The premise of the start-ups is simple: People can rent the electric scooters for about a $1, plus 10 cents to 15 cents a minute to use, for so-called last-mile transportation. To recharge the scooters, (p. B5) the companies have “chargers,” or people who roam the streets looking to plug in the scooters at night, for which they get paid $5 to $20 per scooter.
The problem is that cities have been shocked to discover that thousands of electric scooters have been dropped onto their sidewalks seemingly overnight. Often, the companies ignored all the usual avenues of getting city approval to set up shop. And since the scooters are dockless, riders can just grab one, go a few blocks and leave it wherever they want, causing a commotion on sidewalks and scenes of scooters strewn across wheelchair ramps and in doorways.
So officials in cities like San Francisco and Santa Monica, Calif., have been sending cease-and-desist notices and holding emergency meetings. Some even filed charges against the scooter companies.
“They just appeared,” said Mohammed Nuru, director of the San Francisco Public Works, which has been confiscating the scooters. “I don’t know who comes up with these ideas or where these people come from.”
Dennis Herrera, the San Francisco city attorney who sent cease-and-desist letters to Bird and others, described the chaos as “a free for all.”
Mr. VanderZanden said given how enormous a social shift he believes his scooters are, he was not surprised it ruffled some feathers. But people would eventually adjust, he said.
“Go back to the early 1900s, and people would have a similar reaction to cars because they were used to horses,” he said. “They had to figure out where to park all the dockless cars.”
If there is something familiar about these scooter companies’ strategy of just showing up in cities without permission, that’s because that has now become a tried-and-true playbook for many start-ups. In its early days, Uber, the ride-hailing giant, also barreled into towns overnight to launch its service and only asked for forgiveness later.
“Cities don’t know what it is,” Caen Contee, the head of marketing for LimeBike, said of the arrival of electric scooters. “They don’t know how to permit it until they’ve seen it.”
. . .
“My brother and sister legislators from Santa Monica warned me that that phenomenon has hit their cities,” said Aaron Peskin, who is on San Francisco’s board of supervisors, the city’s legislative branch. Referring to the scooter start-ups, he added, “These people are out of their minds.”

For the full story, see:
Nellie Bowles and David Streitfeld. “Charged Up Over Scooters Despite Uproar.” The New York Times (Sat., April 21, 2018): B1 & B5.
(Note: ellipsis added.)
(Note: the online version of the story has the date April 20, 2018, and has the title “Electric Scooters Are Causing Havoc. This Man Is Shrugging It Off.”)

Workers Rejecting Big-Rig Trucking Jobs

(p. B1) Trucking companies eager to hire more drivers but facing a slim pipeline of new recruits aren’t finding much to encourage them at the James Rumsey Technical Institute in Martinsburg, W.Va.
Enrollment in commercial-driving courses at the school dropped to its lowest point in about 15 years this winter, a signal that the industry’s efforts to sell workers on truck driving haven’t gained much traction. “Recruiters said all the schools were down this winter,” said instructor Michael Timmer, although he added that more students are trickling in as the weather warms.
Freight volumes in the U.S. are surging on the back of strong economic growth, as retailers and manufacturers hire more trucks to haul imports from seaports to distribution centers and raw materials to factories. But the flow of new truck drivers is lagging far behind the roaring freight market.
With unemployment at a nearly two-decade low, the downsides of life behind the wheel are making recruitment tough. Many workers are opting for construction or energy jobs that offer more time at home or better pay.

For the full story, see:
Jennifer Smith. “Trucking’s Big-Rig Life Stays a Tough Sell.” The Wall Street Journal (Wednesday, April 4, 2018): B1-B2.
(Note: the online version of the story has the date April 3, 2018, and has the title “Trucking Companies Are Struggling to Attract Drivers to the Big-Rig Life.”)