August 28, 2015

‘The Economy Will Always Destroy Jobs’: Our Future in an IT-Driven World

DownerWhile speaking with business futurist and author Robert Tercek, I come to realize that Google’s self-driving cars are more than just neat examples of sci-fi tech made fact.

They’re actually, in a way, harbingers of the near future, physical encapsulations of what the whole economy is going to look like roughly a decade from now.

“Today, we can say there are two kinds of companies: production companies that make, manufacture, distribute, and retail things, and information companies, where most of the work happens in software and on computers,” Explains Tercek. “We trend to treat those IT companies separately — but those IT companies are beginning to pervade many other industries.”

See, of course, Google’s self-driving cars for a clear example of IT companies pervading other industries (in this case, the automative industry).

And as IT companies seep into other industries, Tercek says, they’ll bring their business practices with them.

“Among those practices is the focus on software first. Software is at the core of their business,” Tercek explains. “If they can replace any cost component with information — and that includes labor, white collar workers, and executive management — then of course they’re going to do it. It’s cheaper.”

With their leaner, smarter operating methods, IT companies are going to force traditional “production companies” to adapt — see, for example, Ford’s recent forays into wearable technology and other IT-related fields.

Over time, the metastasis of IT is going to make it so that most — if not all — companies will be powered by software.

“The old-school companies will have to become IT companies,” says Tercek. “Some of them will make it, and many of them will not.”

Who’s Gonna Get Vaporized?

But, I’m getting ahead of myself here. How do we get from today, point A, to Tercek’s IT-driven point B?

We get there through a process that Tercek calls “vaporization,” which is the subject of his new book.

The idea, he says, is simple: we’re increasingly replacing “things” with “information,” and by the same process, we’ll soon be replacing “jobs” with “information” as well.

In fact, Tercek points out, we’re already doing just that. All you have to do is go to your local supermarket, where it’s likely that many of the clerks have been replaced by self-checkout aisles.

When a human job is replaced by information, it has been “vaporized,” in Tercek’s terms. Tercek believes that certain jobs, entire companies, and whole industries are at risk for vaporization.

“Whatever can be vaporized, will be,” Tercek says. “I’m not trying to tell people that everything will be turned into software. That’s unrealistic. We still need bridges, and cars, and buildings to live in, and food to eat. Some things will always be with us. But whatever part of that can be done automatically with software — that’s going to happen.”

It’s important to note that, while we often conjure up images of the big, mechanical robots on factory floors when we think of “automation,” most automation is actually unseen and driven entirely by software.

Moreover, Tercek says, the “unseen economy” of this software grows twice as fast as ours, and “there are no jobs for humans in that economy.”

“Any job that is repeatable, routine, with a standard procedure for doing something, that is a candidate for automation,” Tercek says. “In fact, we’re already destroying lot of jobs like that.”

FixerI mentioned the checkout clerks earlier, but automation doesn’t end there. It begins with these lower-level jobs, but it will quickly spread to white-collar positions within the next 10-15 years, according to Tercek.

“It’s already affecting healthcare workers,” Tercek says. “Even doctors who make diagnoses will rely more and more on artificial intelligence programs like Watson.”

Tercek continues: “Automation will begin as a way to augment the white-collar, high-paid specialists, and then, gradually, it’ll become a way to supplement, extend, and provide that service more cheaply. Then, it will replace the need for that human doctor, lawyer, or other professional advice-giver.”

Automating Ourselves Out of Jobs? Maybe, Maybe Not

It took the U.S. six years to replace the jobs lost in the Great Recession — which, as Tercek points out, is longer than it took the U.S. to recover from the previous three recessions combined.

“We’re starting to see that recovery from recessions is taking longer and longer,” Tercek says. “What that tells us is the economy is destroying jobs.”

This may sound like a pronouncement of utter economic doom, but according to Tercek, it’s just business as usual.

“The economy always has to destroy jobs. That’s the essence of productivity,” Tercek says. “I’m not pointing out anything particularly new. Ever since the Industrial Revolution began, all the innovation [has aimed] to replace jobs.”

But, Tercek goes on, the economy usually also creates new jobs while destroying old ones. Typically speaking, these new jobs would pay more and offer more intellectual stimulation. While innovation was destroying jobs through automation, it was also allowing human beings to pursue more fulfilling work.

“If you could find a way to replace human labor for cheaper with a machine, then you would do it. It made more sense,” Tercek explains. “It was more efficient and better for the workers — because, frankly, treating human beings like robots on the factory floor is not the best use of a human being.”

But after the 2008 recession, Tercek says, we didn’t replace the destroyed jobs with higher-paying, more fulfilling jobs. Instead, we replaced the destroyed jobs with more “highly automatable jobs.”

Software and artificial intelligence are improving very quickly, and the concern is that technological innovation is going to outpace our ability to generate new, higher-paying, more stimulating jobs for human beings.

And yet, according to Tercek, there may be no need to panic.

“We’ve been destroying jobs ever since they invented the steam engine, and yet we have always continued to create better jobs,” Tercek says. “Some people call [the idea that we will automate ourselves out of jobs] the ‘Luddite fallacy.’ Their typical economic viewpoint is to say that it will never happen, and that it’s never happened in history. There is no evidence to suggest we can automate our way into massive unemployment.”

Still, however, there may be some cause for concern. Tercek also notes that it’s taking us much longer to create new jobs than it used to, and that today’s most powerful and successful companies — Facebook, Google, Apple, etc. — don’t employ anywhere near as many workers as as the “industrial giants of the past” did.

“It looks like we’re moving into an information era where companies don’t actually have a lot of employees,” Tercek says.

So, What Does the Future Hold?

Well, that’s a little hard to say. All this automation brings with it plenty of good and plenty of (potential) bad.

Let’s go out on an optimistic note: according to Tercek, young workers will do alright for themselves in our future IT-driven economy if they focus on skills like creativity, innovation, novel insights, and, of course, the ability to work with machines and software.

Guitar“If your job involves creativity, decision-making, responding to changing conditions, responding to unpredictable conditions, or operating in a situation where you don’t have 100 percent of the info, then you’re pretty safe,” Tercek says. “And that actually applies to more than half the jobs in our economy — and I mean everyone from plumbers and electricians to teachers and administrators and executive leaders.”

Think of it this way: if Google’s going to be the next major car manufacturer, you want to be the person who helps them program that car.

Because, you know, we now live in a time when people program cars.

Everything’s getting a little weird out here, guys.

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Matthew Kosinski is the managing editor of