The Hollowing Out Of The American Economy

The education reformers both in and out of the Obama administration like to say that there is no unemployment problem in this country, there is an education problem.

Under this dubious theory, Americans are not educating themselves enough to be able to do the high tech jobs the economy is creating.

Once the American public education system is blown up and replaced by a charter school system that actually educates the youth of America better, especially in the areas of math, science, and technology, the unemployment problem will largely disappear.

The NY Times lays waste to this theory today:

When five television studios became entangled in a Justice Department antitrust lawsuit against CBS, the cost was immense. As part of the obscure task of “discovery” — providing documents relevant to a lawsuit — the studios examined six million documents at a cost of more than $2.2 million, much of it to pay for a platoon of lawyers and paralegals who worked for months at high hourly rates.

But that was in 1978. Now, thanks to advances in artificial intelligence, “e-discovery” software can analyze documents in a fraction of the time for a fraction of the cost. In January, for example, Blackstone Discovery of Palo Alto, Calif., helped analyze 1.5 million documents for less than $100,000.

Some programs go beyond just finding documents with relevant terms at computer speeds. They can extract relevant concepts — like documents relevant to social protest in the Middle East — even in the absence of specific terms, and deduce patterns of behavior that would have eluded lawyers examining millions of documents.

“From a legal staffing viewpoint, it means that a lot of people who used to be allocated to conduct document review are no longer able to be billed out,” said Bill Herr, who as a lawyer at a major chemical company used to muster auditoriums of lawyers to read documents for weeks on end. “People get bored, people get headaches. Computers don’t.”

Computers are getting better at mimicking human reasoning — as viewers of “Jeopardy!” found out when they saw Watson beat its human opponents — and they are claiming work once done by people in high-paying professions. The number of computer chip designers, for example, has largely stagnated because powerful software programs replace the work once done by legions of logic designers and draftsmen.

Software is also making its way into tasks that were the exclusive province of human decision makers, like loan and mortgage officers and tax accountants.

These new forms of automation have renewed the debate over the economic consequences of technological progress.

David H. Autor, an economics professor at the Massachusetts Institute of Technology, says the United States economy is being “hollowed out.” New jobs, he says, are coming at the bottom of the economic pyramid, jobs in the middle are being lost to automation and outsourcing, and now job growth at the top is slowing because of automation.

“There is no reason to think that technology creates unemployment,” Professor Autor said. “Over the long run we find things for people to do. The harder question is, does changing technology always lead to better jobs? The answer is no.”

Automation of higher-level jobs is accelerating because of progress in computer science and linguistics. Only recently have researchers been able to test and refine algorithms on vast data samples, including a huge trove of e-mail from the Enron Corporation.

“The economic impact will be huge,” said Tom Mitchell, chairman of the machine learning department at Carnegie Mellon University in Pittsburgh. “We’re at the beginning of a 10-year period where we’re going to transition from computers that can’t understand language to a point where computers can understand quite a bit about language.”

Nowhere are these advances clearer than in the legal world.

...

Quantifying the employment impact of these new technologies is difficult. Mike Lynch, the founder of Autonomy, is convinced that “legal is a sector that will likely employ fewer, not more, people in the U.S. in the future.” He estimated that the shift from manual document discovery to e-discovery would lead to a manpower reduction in which one lawyer would suffice for work that once required 500 and that the newest generation of software, which can detect duplicates and find clusters of important documents on a particular topic, could cut the head count by another 50 percent.

There is an Asimov short story, one of the Robot stories I think, that starts out with a line about how some people were supportive of the robots in society but others worried what humans would do for jobs once the robots took over much of the employment. What would the robots do to the economy?

Well, we're now there.

I have been thinking about this topic a lot, not least of which because I believe ultimately the powers that be will replace teachers like me with computers, virtual instruction software and one or two remote teachers somewhere in Sri Lanka to teach students in NYC.

I have also thinking about this topic in terms of how to help my seniors navigate the college admissions world. Majors that once seem sure bets for employment - like law, like education, like computer programming - now seem more uncertain as automation replaces much of what humans used to do.

I'm no Luddite, but I am uncomfortable with so much of the uncritical "Gee Whiz!" reaction we get to so much of this human-replacing automation we are seeing in the past few years.

And as Autor, the economics professor from MIT, pointed out in the Times article, these high-paying jobs that are disappearing are NOT going to be replaced with anything nearly as lucrative.

Indeed, Robert Reich noted this in his commentary about yesterday's jobs report.

There are jobs returning to America, yes - 190,000+ last month.

But they don't pay anywhere near what the jobs that disappeared back in 2008-2010 paid.

This ought to be the thing that Obama and his merry men are worried about for the future.

But they're not - they're too busy scapegoating teachers and schools for a systemic problem that will not be addressed by education levels, but that will instead be addressed by coming to a different understanding of the value and economics of work.