The wealth of humans: work and its absence in the twenty-first century

The Wealth of Humans, by Ryan Avent, a senior editor at The Economist, addresses the economic and social challenges imposed on societies by the rapid development of digital technologies.  Although the book includes an analysis of the mechanisms, technologies, and effects that may lead to massive unemployment, brought by the emergence of digital technologies, intelligent systems, and smart robots, the focus is on the economic and social effects of those technologies.

The main point Avent makes is that market mechanisms may be relied upon to create growth and wealth for society, and to improve the average condition of humans, but cannot be relied upon to ensure adequate redistribution of the generated wealth. Left to themselves, the markets will tend to concentrate wealth. This happened in the industrial revolution, but society adapted (unions, welfare, education) to ensure that adequate redistribution mechanisms were put in place.

To Avent, this tendency towards increased income asymmetry, between the top earners and the rest, which is already so clear, will only be made worst by the inevitable glut of labor that will be created by digital technologies and artificial intelligence.

There are many possible redistribution mechanisms, from universal basic income to minimum wage requirements but, as the author points out, none is guaranteed to work well in a society where a large majority of people may become unable to find work. The largest and most important asymmetry that remains is, probably, the asymmetry that exists between developed countries and underdeveloped ones. Although this asymmetry was somewhat reduced by the recent economic development of the BRIC countries, Avent believes that was a one time event that will not reoccur.

Avent points out that the strength of the developed economies is not a direct consequence of the factors that are most commonly thought to be decisive: more capital, adequate infrastructures, and better education. These factors do indeed play a role but what makes the decisive difference is “social capital”, the set of rules shared by members of developed societies that makes them more effective at creating value for themselves and for society. Social capital, the unwritten set of rules that make it possible to create value, in a society, in a country or in a company, cannot be easily copied, sold, or exported.

This social capital (which, interestingly, closely matches the idea of shared beliefs Yuval Harari describes in Sapiens) can be assimilated, by immigrants or new hires, who can learn how to contribute to the creation of wealth, and benefit from it. However, as countries and societies became adverse at receiving immigrants, and companies reduce workforces, social capital becomes more and more concentrated.

In the end, Avent concludes that no public policies, no known economic theories, are guaranteed to fix the problem of inequality, mass unemployment, and lack of redistribution. It comes down to society, as whole, i.e., to each one of us, to decide to be generous and altruistic, in order to make sure that the wealth created by the hidden hand of the market benefits all of mankind.

A must-read if you care about the effects of asymmetries in income distribution on societies.

Europe wants to have one exascale supercomputer by 2023

On March 23rd, in Rome, seven European countries signed a joint declaration on High Performance Computing (HPC), committing to an initiative that aims at securing the required budget and developing the technologies necessary to acquire and deploy two exascale supercomputers, in Europe, by 2023. Other Member States will be encouraged to join this initiative.

Exascale computers, defined as machines that execute 10 to the 18th power operations per second will be roughly 10 times more powerful than the existing fastest supercomputer, the Sunway TaihuLight, which clocks in at 93 petaflop/s, or 93 times 10 to the 15 floating point operations per second. No country in Europe has, at the moment, any machine among the 10 most powerful in the world. The declaration, and related documents, do not fully specify that these machines will clock at more than one exaflop/s, given that the requirements for supercomputers are changing with the technology, and floating point operations per second may not be the right measure.

This renewed interest of European countries in High Performance Computing highlights the fact that this technology plays a significant role in the economic competitiveness of research and development. Machines with these characteristics are used mainly in complex system simulations, in physics, chemistry, materials, fluid dynamics, but they are also useful in storing and processing the large amounts of data required to create intelligent systems, namely by using deep learning.

Andrus Ansip, European Commission Vice-President for the Digital Single Market remarked that: “High-performance computing is moving towards its next frontier – more than 100 times faster than the fastest machines currently available in Europe. But not all EU countries have the capacity to build and maintain such infrastructure, or to develop such technologies on their own. If we stay dependent on others for this critical resource, then we risk getting technologically ‘locked’, delayed or deprived of strategic know-how. Europe needs integrated world-class capability in supercomputing to be ahead in the global race. Today’s declaration is a great step forward. I encourage even more EU countries to engage in this ambitious endeavour”.

The European Commission press release includes additional information on the next steps that will be taken in the process.

Photo of the signature event, by the European Commission. In the photo, from left to right, the signatories: Mark Bressers (Netherlands), Thierry Mandon (France), Etienne Schneider (Luxembourg), Andrus Ansip (European Commission), Valeria Fedeli (Italy), Manuel Heitor (Portugal), Carmen Vela (Spain) and Herbert Zeisel (Germany).


Sapiens: A Brief History of Humankind

Historian Yuval Noah Harari‘s best seller book, Sapiens is a hard-to-put-down analysis of the reasons Homo sapiens became not only the dominant species of planet Earth, but also the only one that can control its destiny.

It is difficult to summarize a book that covers the whole of human history, and also a bit of the future. However, Harari’s main point is that the most unique characteristic of our species is not the intelligence of individual human beings, nor some unique quality (a soul, maybe) that only humans possess, much less the ability to stand erect and to create tools. Instead, it is our unique ability to believe and act on collective fictions, created and passed on, over time and space, by language, culture and behavior.

One hundred thousand years ago, humans were already as smart as they are today, were able to make tools, and lived in small groups that could be a threat to the survival of large animals. However, they did not have the ability to change the planet, an ability that only appeared recently, in evolutionary terms.

According to Harari, what makes the human species so different from other species is the ability of humans to create collective fictions that are used to coordinate the actions of thousands, hundreds of thousands, or even millions of human beings. These fictions, the result of what could be called “collective hallucinations”, have created first the agricultural revolution and then the technological revolutions that led to today’s world. It is the ability to create these collective fictions that made Homo sapiens unique, in its ability to transform and also to destroy the world.

Almost anything that is important in today’s society fits into this wide category of a collective fictions or, as he also calls them, religions. Money is, of course, a collective fiction, not valuable by itself, but only because everyone believes in it. But the concept also encompasses religions, political systems, philosophical beliefs, and even several concepts in ethics. Harari’s convincing arguments put at the same level (and calls them nothing else than collective fictions, or religions) systems as diverse as Christianism, Islamism, Capitalism, Marxism, Socialism, Nazism, Humanism, Liberalism, and Democracy. Harari argues that even ideas so commonly accepted as nations, corporations, afterlife, human rights or the sanctity of human life are nothing more than a shared belief, held by almost everyone today, but relatively recent in historical terms.

The argument is powerful, and the book very engaging, a real page turner. As a side benefit, Sapiens is also a grandiose lesson in history, from the prehistoric times to the rise and fall of modern empires, full of surprising facts and wonderful tales.

Intel buys Mobileye by $15 billion

Mobileye, a company that develops computer vision and sensor fusion technology for autonomous and computer assisted driving, has been bought by Intel, in a deal worth 15.3 billion dollars.

The company develops a large range of technologies and services related with computer based driving. These technologies include rear facing and front facing cameras, sensor fusions, and high-definition mapping. Mobileye has been working with a number of car manufacturers, including Audi and BMW.

Mobileye already sells devices that you install in your car, to monitor the road and warn the driver of impeding risks. A number of insurance companies in Israel have reduced the insurance premium for drivers who have installed the devices in their cars.

This sale is another strong indication that autonomous and computer assisted driving will be a mature technology within the next decade, changing profoundly our relation with cars and driving.

The products of Mobileye have been extensively covered in the news recently, including TechCrunchThe New York Times and Forbes.

Image by Ranbar, available at Wikimedia Commons.

Taxing robots: a solution for unemployment or a recipe for economic disaster?

In a recent interview with Quartz, Bill Gates, who cannot exactly be called a Luddite, argued that a robot tax should be levied and used to help pay for jobs in healthcare and education, which are hard to automate and can only be done by humans (for now). Gates pointed out that humans are taxed on the salary they make, unlike the robots who could replace them.

Gates argued that governments must take more control of the consequences of increased technological sophistication and not rely on businesses to redistribute the income that is generated by the new generation of robots and artificial intelligence systems.

Although the idea looks appealing, it is in reality equivalent to taxing capital, as this article in The Economist explains. Taxing capital investments will slow down increases in productivity, and may lead, in the end, to poorer societies. Bill Gates’ point seems to be that investing in robots does indeed improve productivity, but also causes significant negative externalities, such as long term unemployment and increased income distribution inequalities. These negative externalities might justify a specific tax on robots, aimed at alleviating these negative externalities. In the end, it comes down to deciding whether economic growth is more important than ensuring everyone has a job.

As The Economist puts it: “Investments in robots can make human workers more productive rather than expendable; taxing them could leave the employees affected worse off. Particular workers may suffer by being displaced by robots, but workers as a whole might be better off because prices fall. Slowing the deployment of robots in health care and herding humans into such jobs might look like a useful way to maintain social stability. But if it means that health-care costs grow rapidly, gobbling up the gains in workers’ incomes, then the victory is Pyrrhic.”

Gates´ comments have been extensively analyzed in a number of articles, including this one by Yanis Varoufakis, a former finance minister of Greece, who argues that the robot tax will not solve the problem and is, at any rate, much worse than the existing alternative, a universal basic income.

The question of whether robots should be taxed is not a purely theoretical one. On February 17th, 2017, the European Parliament approved  a resolution with recommendations to the European Commission, which is heavily based on the draft report proposed by the committee on legal affairs, but leaves out the recommendations (included in the draft report) to consider a tax on robots. The decision to reject the robot tax was, unsurprisingly, well received by the robotics industry, as reported  in this article by Reuters.

PHOTO DATE: 12-12-13 LOCATION: Bldg. 32B - Valkyrie Lab SUBJECT: High quality, production photos of Valkyrie Robot for PAO PHOTOGRAPHERS: BILL STAFFORD, JAMES BLAIR, REGAN GEESEMAN

Image courtesy of NASA/Bill Stafford, James Blair and Regan Geeseman, available at Wikimedia Commons.



India considers the adoption of Universal Basic Income

A recent article published in The Economist reports that India is considering the adoption of a Universal Basic Income (UBI) scheme to replace a myriad of existing welfare systems.

Unlike the discussions that are taking place in other countries, this discussion about Universal Basic Income is not motivated by advances in technology and the fear of massive unemployment. The main aim of such a measure would be to replace many existing welfare mechanisms that are expensive, ineffective, and misused.

The scheme would provide every single citizen with a guaranteed basic income of 9 dollars a month ( hardly a vast sum ) and would cost between 6 and 7% of GDP. The 950 existing welfare schemes cost about 5% of GDP. Such a large scale experiment would, at least, contribute to make clear the advantages and disadvantages of UBI as a way to make sure every human being has a minimum wage, independent of any other considerations or the existence of jobs.


Photo by Amal Mongia, available at Multimedia Commons.

Will the fourth industrial revolution destroy or create jobs?

The impact of the fourth industrial revolution on jobs has been much discussed.

On one side, there are the traditional economists, who argue that technological advances have always created more and better jobs than the ones they destroyed. On the other side, the people that believe that with the arrival of artificial intelligence and robotics, there will simply not exist enough jobs that cannot be done by machines.

So, in this post, I try to present a balanced analysis on the subject, as deeply as allowed by the space and time available.

Many studies have addressed the question of which jobs are more likely to be destroyed by automation.  This study, by McKinsey, provides a very comprehensive analysis.


Recently, The Economist also published a fairly balanced analysis of the topic, already posted in this blog. In this analysis, The Economist makes a reference to a number of studies on the jobs that are at high risk but, in the end, it sides with the opinion that enough jobs will be created to replace the ones technology will destroy.

A number of books and articles have been written on the topic, including “Raising the Floor“, “The Wealth of Humans: Work, Power, and Status in the Twenty-first Century“, “The Second Machine Age“, and “No More Work“, some of them already reviewed in this blog.

In most cases, the authors of these books advocate the need for significant changes in the way society is organized, and on the types of social contracts that need to be drawn. Guaranteeing every one a universal basic income is a proposal that has become very popular, as a way to address the question of how humanity will live in a time when there are much less jobs to go around.

Further evidence that some deep change is in the cards is provided by data that shows that, with the begining of the XXI century, income is being moved away from jobs (and workers) towards capital (and large companies):


On the other side of the debate, there are many people who believe that humans will always be able to adapt and add value to society, regardless of what machines can or cannot do. David Autor, in his TED talk, makes a compelling point that many times before it was argued that “this time is different” and that it never was.

Other articles, including this one in the Washington Post, argue that the fears are overblown. The robots will not be coming in large numbers, to replace humans. Not in the near future, anyway.

Other economists, such as  Richard Freeman, in an article published in Harvard Magazine agree and also believe that the fears are unwarranted: “We should worry less about the potential displacement of human labor by robots than about how to share fairly across society the prosperity that the robots produce.

His point is that the problem is not so much on the lack of jobs, but on the depression of wages. Jobs may still exist, but will not be well paid, and the existing imbalances in income distribution will only become worst.

Maybe, in the end, this opinion represents a balanced synthesis of the two competing views: jobs will still exist, for anyone who wants to take them, but there will be competition (from robots and intelligent agents) for them, pushing down the wages.