Automation, future of work, and other distractions

The Labour Party, led by the now Minister of Finance, has made great play in recent years of the looming “threat” of automation, and the claimed need to think hard about the Future of Work.  There was a taskforce in Opposition, repeated references in ministerial speeches, and now even a Future of Work Forum.  I’ve always been a little sceptical: the application of new technology has been a key part of how living standards have improved over the last few hundred years, and I’m sure most people are hoping for further improvements for themselves and their children/grandchildren.   And employment rates seemed to be about as high as they’ve been for decades.

And so I was interested this afternoon flicking through today’s online Financial Times to find an article citing some new OECD work suggestiong that New Zealand is among the advanced countries with some of the lower propotions of jobs at significant risk of automation.  Here is the key chart from the OECD paper.

automation2

New Zealand fourth lowest share of jobs at high risk of being automated, and lowest in the OECD for the combined high and significant risks.

For the geeks, here is some text from the paper on how OECD researchers have been revising down their estimates.

automation 4

Automation will, no doubt, continue to happen.  It should.  We’ll generally be better off for it (even if some individuals will face difficult adjustments, as they did in every phase of activity –  indeed every business cycle – since the Industrial Revolution).  But particularly if this methodology is even approximately right, it reinforces my sense that the Labour Party – and now the government –  (probably with good intentions) use the Future of Work issue, and automation risks/possibilities, as a distraction from, and substitute for, their lack of interest/ideas in addressing the real economic elephant in the room: decades of underperforming productivity growth that mean we would now need a two-thirds lift in productivity (all else equal) to once again match the leading countries, most of whom we used to consistently outstrip.

As Morning Report reminded us today on the anniversary of women’s suffrage, we should celebrate the automatic washing machine, for all the time it freed up, and opportunities it allowed people (then largely women) to pursue.  It is only one of a myriad of such innnovations, past, present and future.

But New Zealanders get fewer of the gains than most advanced country citizens, as successive governments have done nothing to reverse the productivity failure.

 

21 thoughts on “Automation, future of work, and other distractions

  1. Agree. History suggests there is always a job to do (even if the future may skew work toward services – I’d struggle with a robotic haircut….).

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    • Our economy is already skewed towards services so the future is already here in NZ. The best service is always more people which equates to lower economic productivity.

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  2. A lot of the jobs where employers complain they can’t get anyone to fill, like milking and fruit picking, etc can be automated if the farmer spends some more money – of course they have borrowed to the hilt to buy the land on which they are farming so can’t afford to invest in the latest technology!

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    • The answer to the farmer is, unfortunately, simple. He becomes uneconomic and is bought by a large corporation that can afford the cost of automation. Thus lowering his work force and putting further pressure on small towns to survive.

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      • Except foreign corporations find it difficult to get approval to buy farms now – and seasonal workers don’t really keep small towns going.

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      • Anthony, It doesn’t have to a foreign company, just one with money to purchase, put in a manager and upgrade the technology. Many farms are now run this way, especially dairy.

        As for the seasonal workers, they are more likely to be early victims of automation. Unless they are willing to work at a wage low enough to make automation more expensive. Wages, where automation can work, will be on a no win race to the bottom to compete.

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      • Around 70 percent of people in small towns – including places like Punakaiki, Waitomo Caves and Milford Sound – are drinking tap water that doesn’t meet Ministry of Health quality standards.

        And in slightly bigger towns, about half of the population drinks water that’s not up to scratch. That includes tourist hot spots like Whangamata, Martinborough and Coromandel.

        The quality of drinking water is so bad in places, there’s fears it could affect our tourism industry.

        https://www.newshub.co.nz/home/travel/2018/09/dirty-drinking-water-could-destroy-new-zealand-s-tourism-industry.html

        Automation will not fix overfarming. We are at peak cow and peak agriculture.

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      • Unfortunately our 10 million cows eat and require the land resources and create wastes to the equivalent of 200 million people.

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  3. I find the list of jobs that the OECD researchers consider safe to be becoming obsolete already.
    #1 Working in cramped spaces and the ability to learn on the job is growing fast.
    #2 The latest chess AI came up with a winning strategy never seen before after just being given the rules for 3 hours.
    #3. Many cold calling services in the US are now done by computer software. It is becoming very difficult to determine if you are talking to a real person or machine. This ability will improve to the point that ‘social intelligence’ does not make you safe.

    The changes automation and AI will bring is something that is not comprehensible to us at the moment. The most dangerous part is our system of rules and laws are not equipped to cope with things that are going to change so quickly. Governments will continually be playing catch and failing badly.

    At the same time it does not mean we should just lie down and wait. I agree that productivity is something that all our so called leaders should be working on improving, for the betterment of all Kiwis.

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    • Higher productivity equates to redirecting NZ industries away from Primary Industries, Tourism and International students towards automated factories. Unfortunately it is rather difficult to automate aged care that does require more groomers, cleaners and nurses which is low productivity.

      71% of the governments revenue comes from PAYE and GST. Robots don’t pay PAYE and robots don’t consume and therefore there is no GST revenue for the government.

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      • The tax system can be changed.

        And your earlier comments about creating the waste equal to 200 million people seem to be plucked out of the air. Newshub is hardly an authoritative source either.

        The corporate farm picture doesn’t sound too bad to me. Farmers currently pay little tax and maybe we need to move to a land tax.

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      • USDA estimates that animal feeding operations annually produce about 100 times more manure than the amount of human sewage sludge processed in US municipal wastewater plants. One dairy farm with 2,500 cows produces as much waste as a city with around 411,000 residents. Unlike human waste, however, in most cases the law does not require that livestock waste be treated.

        http://www.sustainabletable.org/906/waste-management

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      • Big deal, cows eating mostly grass produce waste that can be recycled back onto pasture quite easily. It’s just the run-off that has to be watched and with appropriate measures that is easily contained.

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      • Anthony, that is why I cut back to a more conservative number of 1 cow to 20 people(also there are other studies that point to this number) and also considering that beef cattle has less waste than dairy cows but unfortunately 10 million cows that still equates to the equivalent waste of 200 million people rather than what the US department of Agriculture research studies indicates at a much higher number which is more like 1 cow to 164 people.

        Unfortunately refugees from the Sahara are now blaming New Zealand farmers and agriculture that are still importing fertilizer for our grass fed cows. Tens of thousands of refugees remain displaced from their homeland, there is growing anger towards New Zealand for its role as a prominent trader in the region. While more than a dozen countries have stopped, New Zealand continues, stubbornly resisting criticism. due to our dangerous addiction to pastoral fertiliser.

        New Zealand is rare among agricultural nations for its high rate of pastoral farming. Between 80 and 90 per cent of New Zealand’s agricultural land is dedicated to animals. But it’s heavily reliant on fertiliser, particularly phosphorus, to grow that pasture.

        https://www.stuff.co.nz/business/farming/106331828/nz-cant-shake-its-dangerous-addiction-to-west-saharan-phosphate

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      • Yeah, I’m sure NZ buying a natural resource from another country is a bad thing! I guess you won’t be happy until our economy is on a par with Fiji with our main export being tourism and nearly everyone in low paid service jobs! We don’t have any other natural advantages.

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      • Anthony, it is not true that NZ has no other natural advantages. We have well trained and highly skilled kiwis that can’t develop a career in NZ and have to move overseas. The reason is that most of our government and public resources in the billions have gone towards the Primary industries. The government will subsidise the $1 billion that will be needed to cull cows due to the recent Mycoplasma bovis disease.

        Growers who joined the Kiwifruit class action are claiming $450 million compensation, higher than the figure ($376.4m) the 212 growers were earlier claiming on PSA diseases.

        Border control is a subsidy. Government should just shut down all responsibility relating to this extravagant waste of money on behalf of the primary industries.

        If our manufacturing industries received that level of subsidies we would not need to rely on primary industries and our productivity would be much higher.

        An example was the loss of Rocketlab to US buyers for a meagre $200 million. Rocketlab is the only privately owned rocket launch facility in the world. NZ has a weekly launch window due to Gisbornes isolation. The US has 6 monthly launch windows so we have a natural advantage.

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      • Getgreatstuff while you might have a partial point with Rocketlab (who probably needed offshore expertise anyway) government has a woeful record when it comes to picking winners! Do you not remember Think Big and just about every other time the government has tried to set up or help a particular industry!

        Furthermore, really smart people don’t want to be based in NZ, at least a 12 hour flight from any major centres! We haven’t got the scale for anything other than high-end niche manufacturing. The best government could do would be to lower the company tax rate to something like 12 percent! And maybe contribute to some venture capital funds. The idea that bureaucrats sitting in Wellington can kickstart businesses is laughable!

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      • Beauraucrats in Wellington created the Dairy industry and it is government subsidies that maintain our agricultural industries with annual subsidies that run in billions. Border control, culling cows, disease detection and management, roading, irrigation, the 3 billion provincial development fund, cleaning up dirty rivers, drinking aquifers and coastal seas due to nitrate leaching and bacterial contamination from faecal run off.

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  4. One would have thought that the deployment of ‘AI’ productivity must be positively correlated, and strongly so, just as printing presses and steam engines and telegraphs were.

    The economic issue (so setting aside privacy, dignity stuff, etc) will be distributional.

    If a result is fewer people employed (and without getting into being an apologist for ‘bullshit’ jobs holding the notional employment rate up) a tax/distribution solution might be discuss some manner in which AI output is treated more like to labour than capital output.

    The issues with this are clearly many. Give us your thoughts.

    At any rate surely AI, and the capital/labour substitution effect is downtown in a productivity discussion.

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