Pessimism, statists and innovation

Pessimism, statists and innovation

by Eben Wilson
article from Wednesday 20, September, 2017

THE MESSY WORLD of capitalist innovation; where liberalised individuals use trial, error and quite a lot of muddle to make advances sits ill with a statist perspective.  

The left-wing worldview has always been grounded in pessimism where some do others down in a self-interested conspiracy; and poor outcomes come through the faulty actions of others, not from poor life choices. The poor are poor because the rich are rich; social justice can only be generated through central planning and the exercise of power; “equality” is a state imperative and to hell with the unexpected consequences of the equalisation process. 

This centralising worldview is becoming ever more peculiar in our digitised economy where dispersed production controlled by networked data is becoming the norm.  Businesses small and large now seek to avoid having offices, or even workers; supply contracts are atomised to the skills needed when they are needed and let go once their revenue enhancing purpose is completed.

As an example, I met a man the other day on his way to Osaka. He goes twice a year with a set of specifications and a flash drive to sit with an engineering designer to finalise the programs for a six axis automated machine tool in his works. He comes back, plugs in his pre-tested computer-aided design formulae, turns on the coolant and cuts a lot of steel.  He also only gets paid for his efforts twice each year, but he makes a great deal of money.

Some would say that this is a harbinger of a disaster that is about to hit us through advanced robotics. Piffle. It’s the exact opposite; this atomised individual is using a creative brain to generate huge productivity. He’s actually a bit of a lad, and he would be the first to admit that the money he makes is spent on improved housing, travel, good living and gambling on football. He’s a walking, talking gambling Catherine Wheel of economic growth and job prospects for other people less well-off than himself.

The example is important because of the very fact that he is no academic or introvert. Those who look at robots and artificial intelligence and see them taking work from humans are engaging in false anthropomorphism, and ignoring the crucial process through which invention creates innovations that then create industrialisation and finally commoditisation.

What is this process? It’s what business does for a living. It tries to make busy-ness as cost-less as possible while as profitable as possible. That takes time; productive inventive ideas are adjusted to reduce cost and increase speed of output - innovation; innovation aims to allow repetition in process, hunting down slow parts of any process, automating it or separating it into divided elements - industrialisation; industrialisation is analysed in its operations by management accountants and process engineers to make production yet easier and faster - commoditisation.

Through this process, humans are spun away from production lines; we are too expensive, too fickle and too prone to breakdown; we are the creators not the drones in this discovered process. But as we are moved, the added value of the production we leave behind is always, yes always by definition, higher than keeping us in dead-end processes that are not amenable to innovation, industrialisation and commoditisation. If such steps cannot add value, humans don’t get moved, our services are more valuable than any machine can produce; in that sense we are promoted to become ever more productive supervisors of machines. This is the history of our affluent society and we should be optimistic because the results of this are not what most expect.

For example, should we not think that automated bank machines (ATMs) would destroy jobs? Well, in 1985 there were 60,000 ATMs and 485,000 bank tellers in the USA.  By 2002, the US had 352,000 ATMs and 527,000 bank tellers; plus more than 100,000 repair fitters for the ATMs.

More recently, a study by Deloitte suggested that 800,000 jobs have already been displaced by AI and automation in the UK, but that 3.5 million jobs have been created – with those new jobs paying on average £10,000 more per year.

So, what this process does is move jobs and by lowering costs, creates more. Crucially, it does not mean that these new jobs will pay less; or that the new jobs necessarily need higher intellectual skills.  Think of a coffee shop Barista, the skills needed are essentially human; a mix of customer facing communication, creativity about quality in service, sales skills, and of course watchfulness over semi-automated machines which support those business skills productively, but also need looking after because machines are not self-repairing. This is another myth of the new Luddite tendency; that AI plus robots means “the machine” will self-diagnose, self-repair, and self-reproduce. Try that one on a service fitter and listen to them laugh. 

Time to be optimistic? I am, but in the context of a Scotland in which leftist politicians imbued with statist ideas purport to govern, perhaps I should not be.

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