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Musings Report 2017:20 5-19-17 High Touch, Low Touch and the Relentless Automation of Jobs
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For those who are new to the Musings reports: they are basically a glimpse into my notebook, the unfiltered swamp where I organize future themes, sort through the dozens of stories and links submitted by readers, refine my own research and start connecting dots which appear later in the blog or in my books. As always, I hope the Musings spark new appraisals and insights. Thank you for supporting the site and for inviting me into your circle of correspondents.
High Touch, Low Touch and the Relentless Automation of Jobs
One of my jobs here at oftwominds.com is to survey as much of the incredibly rich flow of articles and essays submitted by readers and correspondents as possible, as well as plow through books which could offer insights into our fast-changing world. (Right now, that includes The Inheritance of Rome: Illuminating the Dark Ages 400 to 1000 AD.)
Let's see if we can't connect two insightful essays, one from musician-essayist David Byrne and the second on the business model of Amazon.com:
Eliminating the Human (via GFB)
"We’re a social species--we benefit from passing discoveries on, and we benefit from our tendency to cooperate to achieve what we cannot alone. In his book, Sapiens, Yuval Harari claims this is what allowed us to be so successful. He also claims that this cooperation was often facilitated by a possibility to believe in 'fictions' such as nations, money, religions and legal institutions.
Machines don’t believe in fictions, or not yet anyway. That’s not to say they won’t surpass us, but if machines are designed to be mainly self-interested, they may hit a roadblock. If less human interaction enables us to forget how to cooperate, then we lose our advantage.
I’m wondering what we’re left with when there are fewer and fewer human interactions. Remove humans from the equation and we are less complete as people or as a society. "We" do not exist as isolated individuals--we as individuals are inhabitants of networks, we are relationships. That is how we prosper and thrive."
Why Amazon is eating the world
"I believe that Amazon is the most defensible company on earth, and we haven’t even begun to grasp the scale of its dominance over competitors. Amazon’s lead will only grow over the coming decade, and I don’t think there is much that any other retailer can do to stop it.
...each piece of Amazon is being built with a service-oriented architecture, and Amazon is using that architecture to successively turn every single piece of the company into a separate platform — and thus opening each piece to outside competition."
There is much more of interest in each piece, but these short excerpts offer a taste of each.
Byrne is commenting on our built-in need for human connection and cooperation, not just for emotional-social reasons but as a competitive, adaptive advantage.
Zack Kanter (author of the essay on Amazon) explains how Amazon's model avoids the flaws of vertical integration (i.e. each division becoming bloated, inefficient and ineffective due to lack of outside competition).
Correspondent GFB observed that Kanter did not mention a major component of Amazon's success: the consumer's willingness to buy commodity-goods without actually seeing the product on the shelves, trying it on, etc.
The unifying thread here is high-touch, low-touch, a concept I covered in my book Get a Job, Build a Real Career and Defy a Bewildering Economy. I was endeavoring to explain why certain kinds of labor are easily automated and other kinds are more immune to automation.
Low-touch transactions / interactions don't offer much value, connectedness or cooperation. A common example is ordering a fast-food meal or checking out at a market. Our interaction with the human being behind the counter is brief and not something valuable enough that the company can charge extra for being served by a human rather than a machine.
The vast majority of consumers would be OK with (or actually prefer) having a low-touch transaction served by a robot or automated system. Rather than wait in line, many of us prefer to use the self-checkout or airport ticket kiosk. Most of us would be delighted to bypass the entire time-wasting hassle of renewing our licenses at the Dept. of Motor Vehicles and many other low-touch interactions.
In effect, Amazon is automating many ordinary low-touch transactions, and few consumers miss what's been lost in the move to home/office delivery of commodity (i.e. basically interchangeable) goods and services.
The kinds of connections Byrne is referencing are high-touch: transactions and connections that involve communication, sharing, cooperation, and all the other bonds of human relationships.
If ordering a fast-food meal is low-touch, a meal at a swank bistro is high-touch. Most people would hesitate to pay a lot of money for food delivered by a robot to a sound-proof booth. In other words, we're paying not just for the food but for a high-touch environment: a knowledgeable wait-person, a sommelier, an atmosphere of conversation, people-watching, etc.
As goods and services become commoditized, the cost of low-touch interactions declines and the cost of high-touch interactions rises.
For example, it's easy to order a commodity set of house plans for $150 off the Internet. Hiring an architect with whom you establish a professional relationship will cost 10 times more for some consulting and 100 times more for a customized set of architectural plans and specs.
There are many other examples of the difference. Consider the future of medical care. Many observers expect robots to perform many routine care tasks such as visiting patients and making sure they are taking their prescribed medications. This is a low-touch interaction.
While ill people won't mind interacting with a helpful robot, what they really want is a human being to stop by and express some interest and concern for their condition. This is the high-touch connection we all want as a human birthright.
A great many of the current jobs in our economies are low-touch, and these will relentlessly be automated, as the value of the human interaction is not worth enough to consumers to pay extra for. If consumers will pay significantly extra for a human taxi driver rather than an automated taxi, then human-driven taxis will be available. But if consumers aren't willing to shoulder the higher costs of humans performing low-touch tasks, human labor in low-touch environments will disappear as a financial necessity.
One of my concerns is that high-touch interactions and connections may well become too costly for many people to afford.
This may not matter much, as most high-touch connections are not monetary exchanges--we communicate, share, and cooperate with friends, family members, neighbors, etc., and there is no direct financial facet to these transactions.
But it seems to me that we need a new organizational structure to enable high-touch transactions and connections that aren't necessarily for-profit or personal (friends/family). This is the foundation of my proposed CLIME system: community labor integrated money economy.
Within the high-low-touch spectrum, clearly there is much middle ground between for-profit commoditized home delivery of goods (low touch) and personal relationships (high touch). This middle is what appears to be at risk of disappearing as automation eats up all the low-touch human labor.
Summary of the Blog This Past Week
Want to Understand Rising Wealth Inequality? Look at Debt and Interest (5/19/17)
The Soft Underbelly of Scandinavian "High-Tax Happy-Capitalism" (5/18/17)
Why We're Fragmenting: The Status Quo Is Disintegrating (5/17/17)
State of Denial: The Economy No Longer Works As It Did in the Past (5/16/17
Globalization and the Rural-Urban Divide (5/15/17)
Best Thing That Happened To Me This Week
Completed the draft of my next "Essentials" book and shipped it to my editor.
Market Musings: Calling Dr. Copper
Many market analysts look at copper as a bellwether of the global economy, as rising demand for copper is associated with widespread expansion and declining demand characterizes recession.
The moniker "Dr. Copper" indicates its role in the health of the global economy.
Unsurprisingly, copper soared as part of the Great Global Reflation trade in which risk-on assets rose sharply.
Prior to the Great Global Reflation, copper was in the doldrums as global growth weakened in 2015 and 2016. Copper traced out a giant wedge/pennant that broke to the upside.
Now copper has weakened, bouncing off an important support-resistance level around $2.50.
This decline has traced out a bullish flag, and MACD is still firmly above the neutral line. As long as MACD stays above the neutral line and copper doesn't break decisively below the 50-week moving average ($2.41), the rally may have a second wind.
If price drops below $2.40 and MACD slips beneath the neutral line, the rally in copper will be in jeopardy.
From Left Field
The Last Remaining Cheap Asset-- grains....
4 Things Futurist Alvin Toffler Predicted About Work Back in 1970
Peace: Neither Ink nor Blood -- a critique of history
Centralization vs. decentralization tensions in the Digital Economy
Coastal Liberals Look Out: The Working Class Is the New Face of Activism
The Arrogance of Blue America: If you want to see the worst impacts of blue policies, go to those red regions--like upstate New York or inland California--in states they control.
Buy a home, get a car free: offers galore as London estate agents struggle to sell
Can blockchain, a swiftly evolving technology, be controlled?
Why Americans Smile So Much: How immigration and cultural values affect what people do with their faces
How disruptive technologies are eroding our trust in government -- govt left behind, slow to adapt and adopt...
10 Breakthrough Technologies -- but do they scale? Is there a market for them? Are they 10 times cheaper and better?
The Democratic Party Is a Ghost -- from a leftish publication...
Who needs a degree? The 'prove-it economy’s' demand for 'codified skills' is "driving a revolution in how education is constructed, delivered, used — and credentialed," writes Laura Pappano in The Atlantic. College degrees "are joined--maybe trumped--by thousands of resume-worthy credentials from shorter, non-degree programs."
"For more than 95% of human history mankind was on universal basic income in the form of a symbiotic relationship with nature." Max Keiser
Thanks for reading--
charles
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