Rise of the Robots: Technology and the Threat of a Jobless Future (27 page)

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This raises the question of whether the liability would simply migrate to the manufacturer of the AI system. Since such systems might be used to diagnose tens or even hundreds of thousands of patients, the potential liability for errors could be daunting. However, the US Supreme Court ruled in the 2008 case
Riegel v. Medtronic, Inc.,
that medical device manufacturers are protected from some lawsuits if their products have been approved by the FDA. Perhaps similar reasoning would be extended to diagnostic systems. Another issue is that previous attempts to create “safe harbor” laws for doctors have been vigorously opposed by the trial lawyers, who have a great deal of political influence.

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Nurse practitioners with advanced degrees have been able to overcome such political opposition in seventeen US states and are likely to be an important component of primary care in the future.

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The names selected by Sankai seem a bit odd for a company focused primarily on elder care. HAL, of course, was the unfriendly computer that wouldn’t open the pod bay doors in
2001: A Space Odyssey.
Cyberdyne was the fictional corporation that built Skynet in the
Terminator
movies. Perhaps the company is eying other markets.

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Consider, for example, the Soviet Union, which by all accounts had some of the best scientists and engineers in the world. The Soviets were able to achieve solid results in military and space technology, but they were never able to scale the benefits of innovation across the civilian economy. The reason certainly has a lot to do with the absence of working markets.

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In the United States, the constitutional authority to create a single-payer system—regardless of whether it is run by the government or by private corporations—probably derives from the government’s ability to levy a tax on everyone to pay for the system. Therefore, all or a portion of the premiums would be paid by the government. This is already the case with the insurance subsidies associated with the Affordable Care Act. In other words, the federal government can force everyone to pay for a single-payer system through taxes, but it cannot prohibit a parallel private system. So there still would likely be additional services available to those willing and able to pay out of pocket, just as there are private schools. This is different from the system in Canada, where most private health care services are prohibited—leading some Canadians to seek health care services in the United States.

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Maryland has a special waiver that has been in place for over thirty years and allows it to pay higher Medicare rates. As of 2014, Maryland has moved to a new experimental system that is allowed under the Affordable Care Act. In addition to setting all-payer rates, the new program will enforce explicit caps on per capita hospital spending. The state expects to save $330 million in Medicare costs over a five-year period.

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The same fact sheet says that Medicaid (the program for the poor) paid 89 percent of actual hospital costs.

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A related issue has to do with the patents granted to drug manufacturers. These prevent the introduction of cheaper, generic drugs for long periods. Many economists believe that the pharmaceutical patent system is very inefficient. Other countries can also potentially threaten to void drug patents as a price negotiating mechanism—putting a still higher burden on Americans. The Center for Economic and Policy Research published a briefing in 2004 that outlines these issues and presents some more efficient alternatives for funding drug research. Please see the corresponding endnote for details.

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The whole idea behind requiring prescriptions is that patients are not able (or cannot be trusted) to make these decisions for themselves. Why, then, do we allow drug companies or medical equipment manufacturers to advertise directly to patients?

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One could also speculate that technology is
indirectly
contributing to diminished prospects for pharmacy graduates by driving more people into the profession. In the first decade of the new millennium, nearly fifty new pharmacy graduate schools opened their doors (a 60 percent increase), and existing programs also dramatically increased enrollments. The number of newly graduated pharmacists could hit 15,000 per year by 2016; that’s over twice the number of degrees granted in 2000. Something very similar (and perhaps even more extreme) happened with law schools, and the law school enrollment bubble is now famously bursting. Law school has always been a well-traveled path toward monetizing a liberal arts degree. Pharmacy offers similar potential for an undergraduate biology degree. It may be that soaring demand for these professional degrees results, at least in part, from the evaporation of other good opportunities for college graduates. With relatively few other attractive alternatives, college graduates have clamored to get into law or pharmacy school, and the industry has responded by expanding enrollment and ultimately producing far more graduates than the market could absorb. The fact that both pharmacy and law are also impacted by direct automation makes things even more unsustainable. My prediction for the next professional school bubble: MBA degrees.

Chapter 7

TECHNOLOGIES AND INDUSTRIES OF THE FUTURE

YouTube was founded in 2005 by three people. Less than two years later, the company was purchased by Google for about $1.65 billion. At the time of its acquisition, YouTube employed a mere sixty-five people, the majority of them highly skilled engineers. That works out to a valuation of over $25 million per employee. In April 2012, Facebook acquired photo-sharing start-up Instagram for $1 billion. The company employed thirteen people. That’s roughly $77 million per worker. Fast-forward another two years to February 2014 and Facebook once again stepped up to the plate, this time purchasing mobile messaging company WhatsApp for $19 billion. WhatsApp had a workforce of fifty-five—giving it a valuation of a staggering $345 million per employee.

Soaring per-employee valuations are a vivid demonstration of the way accelerating information and communications technology can leverage the efforts of a tiny workforce into enormous investment value and revenue. What’s more, they offer compelling evidence for how the relationship between technology and employment has
changed. There is a widely held belief—based on historical evidence stretching back at least as far as the industrial revolution—that while technology may certainly destroy jobs, businesses, and even entire industries, it will also create entirely new occupations, and the ongoing process of “creative destruction” will result in the emergence of new industries and employment sectors—often in areas that we can’t yet imagine. A classic example is the rise of the automotive industry in the early twentieth century, and the corresponding demise of businesses engaged in manufacturing horse-drawn carriages.

As we saw in
Chapter 3
, however, information technology has now reached the point where it can be considered a true utility, much like electricity. It seems nearly inconceivable that successful new industries will emerge that do not take full advantage of that powerful new utility, as well as the distributed machine intelligence that accompanies it. As a result, emerging industries will rarely, if ever, be highly labor-intensive. The threat to overall employment is that as creative destruction unfolds, the “destruction” will fall primarily on labor-intensive businesses in traditional areas like retail and food preparation, while the “creation” will generate new businesses and industries that simply don’t hire many people. In other words, the economy is likely on a path toward a tipping point where job creation will begin to fall consistently short of what is required to fully employ the workforce.

YouTube, Instagram, and WhatsApp are, of course, all examples drawn directly from the information technology sector, where we’ve come to expect tiny workforces and huge valuations and revenues. To illustrate how a similar phenomenon is likely to unfold on a much broader front, let’s look in a bit more depth at two specific technologies that have the potential to loom large in the future: 3D printing and autonomous cars. Both are poised to have a significant impact within the next decade or so, and could eventually unleash a dramatic transformation in both the job market and the overall economy.

3D Printing

Three-dimensional printing, also known as additive manufacturing, employs a computer-controlled print head that fabricates solid objects by repeatedly depositing thin layers of material. This layer-by-layer construction method enables 3D printers to easily create objects with curves and hollows that might be difficult, or even impossible, to produce using traditional manufacturing techniques. Plastic is the most common construction material, but some machines can also print metal, as well as hundreds of other materials, including high-strength composites, flexible rubber-like substances, and even wood. The most sophisticated printers are able to build products containing as many as a dozen different materials. Perhaps most remarkably, the machines can print complex designs containing interlocking or moving parts as a single unit—eliminating any need for assembly.

A 3D printer lays down layers of material either by design or simply by copying an existing object using a 3D laser scanner or with sophisticated tools like computed tomography (CT scans). Late-night comedian Jay Leno, a classic-car enthusiast, uses this technique to produce replacement auto parts.

Three-dimensional printing is ideal for producing highly customized “one-off” products. The technology is already being used to build dental crowns, bone implants, and even prosthetic limbs. Design prototypes and architectural models are other popular applications.

An enormous amount of hype surrounds 3D printing and, in particular, its potential to upend the traditional factory-based manufacturing model. Much of this speculation is focused on the emergence of inexpensive desktop machines. Some enthusiasts foresee a future era of distributed fabrication, where virtually everyone owns a 3D printer and uses it to produce whatever he or she needs. Others project the rise of a new craft-based (or “maker”) economy where small companies displace high-volume factory production with more personalized, locally produced products.

I think there are good reasons to be skeptical of such predictions. The most important reason is that the ease of customization offered by 3D printing comes at the cost of economies of scale. If you need to print a few copies of a document, you might do it on your home laser printer. If, however, you need 100,000 copies, it would be much more cost-effective to use a commercial printer. 3D printing versus traditional manufacturing involves essentially the same trade-off. While the printers themselves are rapidly falling in price, the same cannot be said of the material used in the process, especially if something other than plastic is required. The machines are also slow; building a substantial solid object in a consumer 3D printer can take several hours. Most of the products we use do not necessarily benefit from whole-scale customization; indeed, standardization often has important advantages. Three-dimensional printing might be a great way to create a custom case for your iPhone, but it seems very unlikely that you’ll ever print the phone itself.
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If cheap desktop printers do become ubiquitous, that would likely destroy the market for finished products created with such machines. Instead, any value would reside entirely in the product’s digital design file. Some entrepreneurs would be successful selling such designs, but the market would almost certainly evolve into the same winner-take-all scenario that characterizes other digital products and services. There would also be a multitude of free or open source
designs—probably for nearly any conceivable product—available for download. The bottom line is that personal 3D printing would come to look much like the Internet: lots of free or inexpensive stuff for consumers, but far fewer opportunities for the vast majority of people to generate a significant income.

This is not to say that 3D printing won’t be a transformative technology. The real action is likely to happen at industrial scale. Rather than displacing traditional manufacturing, 3D printing will be integrated with it. In fact, that’s already happening. The technology has made significant inroads in the aerospace industry, where it is often used to create lighter-weight components. General Electric’s aviation division plans to use 3D printing to produce at least 100,000 parts by 2020, resulting in a potential weight reduction of 1,000 pounds for a single aircraft engine.
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To get a sense of how much fuel lopping half a ton off every engine could save, consider that in 2013, American Airlines replaced the paper flight manuals carried in its cockpits with digital versions loaded onto Apple iPads. That saved about 35 pounds per plane—and $12 million in annual fuel costs.
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Cutting each plane’s weight by an average of 3,000 pounds could save a billion dollars or more per year. One of the components that GE plans to print, a fuel nozzle, normally requires the assembly of twenty separate parts. A 3D printer will allow the entire component to be printed in one unit, fully assembled.
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As we saw in
Chapter 1
, manufacturing is likely to become more flexible, and in many cases, factories will be located closer to consumer markets. Three-dimensional printing will have a role to play in this transition. The technology will be used where it is most cost-effective: for example, in creating those parts that need to be customized, or perhaps in printing complex components that would otherwise require extensive assembly. Where 3D printing can’t be used to directly fabricate high-volume parts, it will often find a role in rapidly creating the molds and tools required in traditional manufacturing techniques. In other words, 3D printing is likely to
end up being another form of factory automation. Manufacturing robots and industrial printers will work in unison—and increasingly without the involvement of workers.