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May 04, 2013

Cognitive Ability and Employment in the 21st Century

It’s becoming more and more obvious that America’s job engine is stuck, and there’s no real consensus on what's causing the problem. Some of it has to do with changing demographics, some with government regulation of (and interference with) the economy, some with bad fiscal and tax policy -- the usual suspects. However, it is also obvious that we are undergoing a major shift in the post-Industrial Age economic model.

A book called Race Against the Machine came out a couple of years ago that concisely stated what many economists, technologists, and futurists have been thinking for a while now: that machines are obviating the need for humans in many parts of our high-tech globalized economy. And the pace of this displacement is accelerating. I’m not going to recapitulate that book here, but I recommend it -- I don’t agree with everything the authors say, but overall I find the argument compelling.

If machines are displacing humans in the workplace, and thus causing higher unemployment than we are used to without necessarily causing a drop in GDP, what (if anything) can be done about it?

Before I dive into that question, I want you to consider the following simple graph:

This is what is known as a Gaussian distribution, or a “bell curve”. Many statistical phenomena in nature conform to this distribution, but the one I want to discuss is human cognitive ability (or “IQ”). It’s long been accepted as scientific fact that human cognition among large populations adheres to a Gaussian distribution. There are sharp disagreements about how to measure human cognition (or even whether it can be measured accurately), and even sharper disagreements as to the outcomes of experiments designed to measure cognitive ability, but decades of empirical study leave the basic fact intact: human cognitive ability falls into a Gaussian distribution just like other human properties like height, weight, and so forth.

But why does this matter to our discussion of the technology-driven change to the economy?


It matters because the changes will spell a lot of grief and hardship for people on the left side of that cognitive-ability bell curve.

It turns out that being smart is a huge advantage in nature. Human beings have ascended to the very apex of life on this planet not by being faster or stronger or more durable or more patient than any other species -- we got here by being smarter. Being smart is a huge survival advantage mainly because it allows a creature to plan, to think ahead, to weigh alternatives. It allows us to alter our environment to protect and benefit ourselves rather than be at the mercy of nature. It allows us to extend our bodies via tools and machines to vastly magnify our power. It allows us to consider future consequences to present actions. All of these traits add up to a huge survival advantage, and that’s why homo sapiens has taken over the earth in a little over one hundred thousand years.

But as our collective intelligence has grown and our civilization becomes increasingly reliant on technology, a problem has arisen, a problem based in the reality of the bell curve: the Red Queen’s race is leaving the cognitively duller and slower humans behind. Machines are doing more and more of the work that used to be done by people on the left side of the bell curve -- the “strong back” agricultural and Industrial-age factory work that used to define what “work” was for most people. Machines are cheaper than human workers over the long term because they don’t get sick, they don't get bored, they don’t go on strike, they don’t draw a pension or require healthcare benefits, and when they break, they can be thrown away and replaced with a new machine with no muss and no fuss.

The Industrial-age Luddite movement was a cry against this automation of work, but it was doomed to failure. The machines were simply superior to their human counterparts in many jobs. As technology has moved on and become more advanced, machines have been moving into more and more niches that used to be driven by human labor: agriculture, resource extraction, fabrication, construction, even the production of art and music. And the process is accelerating.

Today, we have reached the point where we can maintain and even grow our GDP with less and less human input into the process. Hence the chronic and structural unemployment problems not just in America, but across the developed world. We have a surfeit of workers whose labor price is not competitive with machines. Most (but not all) of these workers fall on the left side of the cognitive bell curve.

Nearly anyone can be a dishwasher or a salesclerk or a janitor or a groundskeeper or an assembly-line worker. These jobs do not require a high degree of skill or training, and tend to involve performing simple, repetitive tasks. This also means that a machine can (or will be) invented to do that job for less money. Not everyone can be a software developer, a database administrator, a structural engineer, or a doctor. These jobs are hard to automate because they require a high level of cognitive ability and have proven difficult to automate (so far).

The simple answer -- to which politicians and social planners return again and again -- is "more education". But this doesn’t help people on the left hand side of the bell curve all that much. They simply do not have the capacity to retain the cognitively-advanced information. It is beyond them. It sounds cruel to say so, but it is nevertheless a fact. The simple truth is that a great deal of human cognitive ability is innate: you’re either born with it or you’re not. This issue is still ferociously debated, but the evidence so far is that nature wins over nurture to a significant degree.

If it is true that duller people cannot simply be made smarter through training or schooling or other forms of conditioning...how can they be gainfully employed in the highly-automated, high-technology workforce of the 21st century? And the uncomfortable truth is: no one knows. Governments the world over have instituted welfare and entitlement systems to protect people against the ravages of unemployment, but these systems are starting to stagger and fall underneath their enormous costs. If it’s really true that a third to half the present workforce of the world is unsuited for gainful employment, what is society to do with these millions of unemployed (and essentially unemployable) people?

Aldous Huxley, in his 1935 novel Brave New World, foresaw a world split into two basic castes: the intellectual elite, and the cognitively dull servant class. But even in Huxley’s dystopia, the Epsilons at least had a job to do, even if it was only being a beast of burden. In the real world in the 21st century, a machine can probably do that “strong back” job better and more cheaply than any human Epsilon could.

A wage is the cost of labor for a given job. The problem we’re facing is that for millions and millions of people, their labor cost is too high for the skills they can bring to bear. A machine’s labor-cost can undercut them...but at the same time the workers lack the cognitive resources to re-train for a better job. For many people, it means a life lived in vain -- fit only for government handouts and welfare, a life bereft of meaning or goals, a life consumed by minutiae, tedium, and waste. If we assume that useful work provides a person not just with a livelihood, but with dignity and purpose and meaning, what options do we have going forward?

I offer no answer because I honestly don’t know. But I suspect that this issue will become more critical as the years go by and the old Industrial-age economies struggle to deal with the realities of highly-automated 21st century industry. Those millions and millions of unemployed people aren't simply going to disappear just because they're inconvenient.

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posted by Monty at 11:53 AM

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