Do you ever wonder what the world will look like in 100 years?
Self-flying cars, robot servitors, genetic based medical care ensuring perfect health and long lives?
It’s as good of a guess as any. 100 years is a long time, and all we have to go on is our past and present knowledge. After all, who could have imagined touchscreens, iPhones or cloud storage 100 years ago?
Most people will just think of more complicated, efficient versions of their present day. When people in 1899 were asked the same question they envisioned flying firefighters and a mechanical broom and shovel.
Yet we don’t have these wonders 117 years later. And maybe we never will. But what’s better at fighting fires than flying firefighters? Flame retardant materials. They eliminate having to fight fires in the first place.
And what’s better at cleaning than a mechanical broom and shovel? A vacuum cleaner. Or better yet, a robot vacuum cleaner that cleans the floors while you’re at work.
While we cannot know for sure what the distant future holds, we can be sure it will be remarkable. And that some of the technology in common use in 100 years would be almost unimaginable today.
We can also be sure that much of this technology will save us time.
The more jobs we give to machines, the more productive we become. Just look at the graph below. It shows productivity and US real median incomes from 1947 to 2009.
Source: State of Working America
Click to enlarge
As you’ll notice, productivity keeps climbing, while real median income loses momentum around 1971. One reason for this disparity is simply because we are giving more jobs to machines, which can perform tasks more efficiently. So where does the extra money go from the increased productivity, if not into workers’ pockets? That’s a story for another day. But you can rest assured the machines are not taking home six figure bonuses.
Anyhow, as we push the boundaries of what machines can do, we increase their capacity to do more tasks. Even many medical, cooking and transportation jobs can now be handed over to robots.
That’s a frightening thought for many people. And you’ll see plenty of scary headlines about machines coming to steal your jobs. But most of those headlines are there just to drive sales.
The automation of the workplace really leaves us in the same place we’ve always been. Will it lead to mass unemployment? Of course not. That’s what I call Dark Age thinking.
Dark Age thinking
The Industrial Revolution was one of the highest growth periods in history. In what seems like overnight looking back on it today, we were suddenly able to produce goods at a rate never seen before.
The textile industry pumped up its output by a factor of 40. Improved steam power engines revolutionised the transport industry, making trains faster and more efficient. Iron making was made 15 times faster.
And this was all possible because we handed many tasks to machines.
Like today, workers at the time were concerned about the potentially disastrous change to the employment market. However, their concerns proved largely unfounded. To run and work in unison with the machines in order to increase output, more labour was required.
More people were employed throughout factories in Europe. Large clusters of people in one area propelled the agriculture industry forward. What propelled the agricultural industry forward was industrial technologies. Equipment like the seed drill and the Dutch plough made farming more efficient.
And with an increase in population density, more workers out in the fields meant more crops and food for the population.
Instead of taking jobs, machines created them, and helped usher in the far more comfortable life we enjoy today. Of course many jobs were taken in the process. Better trains meant fewer carriage drivers. But it also meant more trains, engineers, mechanics, rail workers and ticket agents.
Improving technology makes a few jobs redundant to create a whole lot more.
Let’s use a modern day example. We could potentially see robot bricklayers used commercially in the next few years. A company in Australia, Fastbrick Robotics Ltd [ASX:FBR], is currently developing technology to automate the construction processes.
Now this could potentially put a lot of construction workers out of their jobs. However, at the same time, a robot bricklayer could create multiple new jobs.
System engineers, operators, people to fix and maintain each robot. These jobs would all be done by humans.
In fact, when a process becomes automated, the human element becomes even more crucial. If left to its own devices machines and robots could malfunction, creating an inefficient process.
Adding automation to an inefficient process increases the inefficiency dramatically. Therefore even if robots take over every job, we’ll still need us humans to make sure the machines are working properly.
It’s not untrue to say that machines will dominate certain industries. But as I’ve already explained, there’s little to stress about. Robots won’t likely cause mass unemployment. Yet the idea of robots taking over still persists.
An article recently published by the Sydney Morning Herald sounded like a doomsday message. It told readers to be prepared for the coming of robots.
Using data released by the Economic Analysis Department at the Reserve Bank of Australia, the SMH warned those who have a routine skill could soon be out of the job.
‘The researchers took data for 17 industries and the eight major occupations within each and classified each jobs into one of the four groups.
‘What they found was clear.
‘As expected, the sharpest decline was in the share of jobs that could be considered routine manual. A good example of such would be forklift drivers. More sophisticated machinery and assembly lines have made many of these workers redundant. In the mid-1980s, such jobs made up the biggest group of workers, accounting for four out of 10 jobs. Today that has fallen to three in 10.’
Yet as we’ve seen, the job market changes all the time. We no longer have a milk man delivering the milk, and we don’t have people collecting our waste from outhouses each week either.
What many people fail to realise is that human society is not fixed. If skills like driving or building become no longer valuable for humans to do, we’ll learn new skills.
There will always be jobs, regardless of which ones are given to machines. A better question to ask is how can you stand to profit from the rise of machines? While efficiency is an obvious advantage, this trend also presents a huge investment opportunity.
To find out more, click here.
Contributing Editor, Money Morning
From the Port Phillip Publishing Library
Special Report: Is anyone out there topping Australian Small-Cap Investigator’s amazing track record right now? The average return across the entire buy list is 75.69%. That’s inclusive of winners and losers. Imagine having a 75.69% average gain running across every stock in your share portfolio! What’s the surprising (and strange) secret behind this figure? And what are ASI’s four ‘marquee stock picks’ for 2017? Click here for more…