December 14, 2011
On November 4th last year, the Prime Minister spoke about the internet startup hub that has grown up in Shoreditch , known as "Silicon Roundabout" and more recently co-opted by the government under the name of "Tech City":
Well, possibly, and possibly not. Twitter has a valuation of around $8 billion – sizeable enough that one might think it'd be a real job creator. But the company has only 650 employees . Maybe you think that Twitter is overvalued, and want to look at a technology company that makes a serious amount of money, like Facebook's estimated $1 billion profit this year. It's undoubtedly a sum that would be more than welcomed by the government, but Facebook employs only 3,000 people .
Then there's Apple, the world's most valuable company with $14 billion in profits, $65 billion in revenue, and $75 billion basically sitting in the bank. Of course, at those levels we're finally reaching bigger numbers, and indeed Apple employs a respectable-sounding 60,000 people . Yet while Sainsburys has less than half the revenue and less than a tenth of Apple's profits, it employs almost three times as many people – some 150,000. We have 2.6 million people unemployed in the UK – a dozen Facebooks or a hundred Twitters wouldn't serve to solve that problem, even if you subscribe to the "trickle-down" theory.
This should come as no surprise. Innovation has always been about solving problems faster, cheaper, and better. You don't see IBM boasting that their new AI supercomputer Watson is so inefficient it'll generate the need for thousands more jobs. On the contrary, the excitement surrounding Watson is not about how it's a Jeopardy quiz show champion – it's about its ability to process natural language in a way that could save millions by eliminating tens or hundreds of thousands of customer service positions like entry-level call centre jobs.
For every invention we make, from mobile phones to online shopping, self-checkout tills, and driverless cars, we eliminate hundreds of thousands of jobs elsewhere. Inventions are about doing more with less, allowing people to become more productive, and over time, the newly unemployed move into more productive sectors – from making buggy whips to repairing cars, for instance.
So perhaps we should be comforted by the belief that, as in the past, everything will work out just fine in the long term and everyone who's lost their job will retrain to become a computer programmer or someone who provides services to programmers: to think otherwise would be to cast yourself as a Luddite. But the Luddites may have the last laugh, as suggested by The Economist's Babbage ; in short, whereas the technological advances of the past improved productivity while still requiring decent numbers of human operators, the advances of the future – most notably in artificial intelligence – could start permanently removing human operators from the loop.
All of this makes the current rhetoric surrounding unemployment particularly unhelpful. While it is easy to dismiss the predicament of the jobless as being that of (take your pick) deep-seated moral failings, the EU, a lack of consumer demand, the result of globalisation, or all of the above, it's clear that there are deep structural changes coming very soon to the very nature of work and employment, and that innovation is not going to solve the problems it's created this time.
Lest you think this is all pie-in-the-sky nonsense, it's a safe bet that driverless cars will be on our roads in next 20 years or so; not only does Google have a car that's safely driven itself for over 160,000 miles without incident, but next year you'll be able to buy a Mercedes that can fully drive itself below speeds of 25mph. There are hundreds of thousands of people employed as drivers in the UK; what happens if they become surplus to requirements? Are we so sure that they'll all be able to find work in different areas? Likewise, supermarkets' adoption of home delivery and self-checkout tills demonstrates that they have no particular fondness for having human employees when it comes to maximising profits.
It's instructive to compare this potential future with the very real present in 'petro-states' such as Iran and Saudi Arabia. The massively profitable oil industry that keep these states afloat simply doesn't generate many jobs; it's capital-intensive, but not human-intensive. The resulting lack of employment is toxic for both their people and for the entire world.
In our own country, we could do with a little less naive and self-serving championing of the digital sector and its ability to create jobs, and a little more thought on exactly how we are going to make millions of jobs in the future. Don't get me wrong – I can't wait until we have driverless cars and all the other innovations that are coming. The problem is that we can't all work in Google and Facebook (even if we are finally starting to teach programming again), and we don't want all want to work in supermarkets or nail bars either – assuming that they still need to employ people. It's no good having a strong economy if we still have millions unemployed.