Money Work Robocalypse now? Central bankers argue whether automation will kill jobs
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Robocalypse now? Central bankers argue whether automation will kill jobs

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Manufacturing workers at the Rode Microphones factory in Sydney. Photo: AAP
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The rise of robots has long been a topic for sci-fi best sellers and video games and, as of this week, a threat officially taken seriously by central bankers.

The bankers are not yet ready to buy into dystopian visions in which robots render humans superfluous.

But, at an exclusive gathering at a golf resort near Lisbon, the big minds of monetary policy were seriously discussing the risk that artificial intelligence could eliminate jobs on a scale that would dwarf previous waves of technological change.

“There is no question we are in an era of people asking, ‘Is the Robocalypse upon us?’” David Autor, a professor of economics at the Massachusetts Institute of Technology, told an audience on Tuesday that included Mario Draghi, the president of the European Central Bank, James Bullard, president of the Federal Reserve Bank of S. Louis, and dozens of other top central bankers and economists.

The discussion occurred as economists were more optimistic than they had been for a decade about growth.

But along with the optimism is a fear that the economic expansion might bypass large swaths of the population, in part because a growing number of jobs could be replaced by computers capable of learning.

Policy makers and economists conceded that they have not paid enough attention to how much technology has hurt the earning power of some segments of society.

That has, in part, nourished the political populism that contributed to Britain’s vote a year ago to leave the European Union, and the election of US President Donald Trump.

“Generally speaking, economic growth is a good thing,” Ben Bernanke, former chairman of the US Federal Reserve, said at the forum.

“But, as recent political developments have brought home, growth is not always enough.”

Artificial intelligence now threatens broad categories of jobs previously seen as safe from automation, such as legal assistants, corporate auditors and investment managers. Large groups of people could become obsolete, suffering the same fate as plow horses after the invention of the tractor.

“More and more, we are seeing economists saying, ‘This time could be different,’” said Mr Autor, who presented a paper on the subject that he wrote with Anna Salomons, an associate professor at the Utrecht University School of Economics in the Netherlands.

Central bankers have begun examining the effect of technology on employment because it might help solve several economic quandaries.

Mario Draghi bank
European Central Bank president Mario Draghi. Photo: EPA

Of particular interest to the European Central Bank is why faster economic growth has not caused wages and prices to rise.

The central bank has pulled out all the stops to stimulate the eurozone economy, cutting interest rates to zero and even below, while printing money.

Four years of growth have led to the creation of 6.4 million jobs. Yet inflation remains well below the bank’s official target of below, but close to, 2 percent.

One explanation is that more work is being done by advanced computers, with the rewards flowing to the narrow elite that owns them.

Since the beginning of the industrial age, almost every major technological innovation has led to dire predictions that humans were being permanently replaced by machines.

While some kinds of jobs were lost forever, greater efficiency led to more affordable goods and other industries soaked up the excess workers.

There are other explanations for stagnant wages besides technology.

Companies in Japan, the United States and Europe are sitting on hoards of cash, doling out the money to shareholders rather than investing in new buildings, equipment or innovative products. Just why is another topic of debate.

Hal Varian, the chief economist at Google — whose self-driving technology may someday make taxi drivers unnecessary — said that the plunging cost of information technology “has virtually eliminated the fixed cost of entering a business”.

But Mr Bernanke referred to polls showing that about twice as many Americans say the United States is on the wrong track than say the country is moving in the right direction.

Mr Autor, co-author of the Robocalypse paper, concluded that it was too early to say that robots are coming for people’s jobs. But it could still happen in the future.

“I say not Robocalypse now,” Mr Autor said, “perhaps Robocalypse later”.

– The New York Times

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