Executives at Davos Are Eager for Automation
Donald Trump has often mentioned bringing back manufacturing jobs, 5.5 million of which were lost in the U.S. from 2000 to 2017, according to the Bureau of Labor Statistics. But while the president blames trade deals for the job losses, economic experts and officials, including from the Center for Business and Economic Research at Ball State University, see another culprit: the rise in automation, with machines taking over positions that had been only performed by humans.
While 72 percent of Americans are very or somewhat worried about the prospect of automation, as the Pew Charitable Trust found in 2017, one group that remains unfazed, perhaps even enthusiastic about the prospect of a robot-worker future, are the wealthy attendees of the World Economic Forum in Davos, Switzerland, according to a Davos dispatch from Kevin Roose in The New York Times. “They’ll never admit it in public,” Roose writes, “but many of your bosses want machines to replace you as soon as possible.”
Publicly, Roose continued, attendees “wring their hands” over most lost jobs, but in private, “they are racing to automate their own workforces to stay ahead of the competition, with little regard for the impact on workers.”
Mohit Joshi, president of Infosys, a firm that helps other companies automate their operations, told Roose that more companies are coming to Infosys with ever-increasing goals for achieving more profits with fewer workers; “Earlier they had incremental, 5 to 10 percent goals in reducing their workforce, Now they’re saying, ‘Why can’t we do it with 1 percent of the people we have?’”
Executives at Davos, Roose reported, claim they have no choice but to automate. He quotes Katy George, a senior partner at the consulting firm McKinsey & Company, who told him, “They will be disrupted if they don’t,” and their competitors will get there first.
The impacts of automation “will vary, especially across occupations, places and demographic groups,” a January report on automation and artificial intelligence from the Brookings Institution explained. The report also cautions the effects of automation “will be neither apocalypse nor utopia, but instead both benefits and stresses alike.”
What might be the positive aspects of automation and artificial intelligence? One is that even if some jobs are eliminated, others will be created. Also, as Roose noted, “some automation helps workers by improving productivity and freeing them to focus on creative tasks over routine ones.”
The Brookings Institution report said that people whose work focuses on “‘routine,’ predictable physical and cognitive tasks will be the most vulnerable to automation in the coming years.” This includes “office administration, production, transportation and food preparation.”
Executives, according to Roose, would not specify how much money they were saving with automation, though his reporting suggests the practice is beneficial to at least a few companies’ bottom lines. For example:
IBM’s ‘cognitive solutions’ unit, which uses AI to help businesses increase efficiency, has become the company’s second-largest division, posting $5.5 billion in revenue last quarter. The investment bank UBS projects that the artificial intelligence industry could be worth as much as $180 billion by next year.
Ben Pring, the director of the Center for the Future of Work at Cognizant, a technology services firm, explained to Roose that companies are facing a conflict between their desire for profits and the increasing public distrust of automation as people fear losing their livelihoods. “On one hand,” Pring said, executives “absolutely want to automate as much as they can. On the other hand … they’re facing a backlash in civic society.”
Even if automation is inevitable, according to Roose, the job loss doesn’t have to be catastrophic. These wealthy executives are at a turning point, Roose writes, in which they must “choose how the gains from automation and AI are distributed, and whether to give the excess profits they reap as a result to workers or hoard it for themselves and their shareholders.”