Imminent Wealth: Toward the Extinction of Work

By Christopher Grandy

Automation promises to dramatically reduce the work required to produce goods and services. In this sense, it envisions a massive increase in wealth. And yet automation also threatens to displace human labor, imperiling livelihoods. Imminent Wealth explores this paradox. The issues arise through characters embodying different perspectives and interests: From the long-time manufacturing employee close to retirement, to the young MBA technology-buff, to the exhausted businessman facing relentless competition, to the twenty-something addict trying to escape, to the brilliant consulting CEO, to the policy analyst trying to figure out what's happening. The anxieties and fears of automation surround the irresistible lure of its promise. Imminent Wealth presents one path toward squaring the circle.

• Language: English
• Publisher: Christopher Grandy
• Release date: Mar 16, 2021
• ISBN: 9780463427958

Christopher Grandy

Christopher Grandy is a retired faculty member of the Public Administration Program at the University of Hawaii (Manoa). Grandy served on the faculties of the economics departments at Barnard College and the University of Hawaii. He worked as an economist for the Hawaii Department of Business, Economic Development, and Tourism during the administrations of Governor Benjamin Cayetano (1995-2001). Grandy served on the Hawaii State Tax Review Commission (2005-2007) and was a member of the Hawaii State Council on Revenues from 2011 to 2019.

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For Devon

Preface

I have been interested in economic policy for decades. I suppose most economists are. The possibility that human beings can take joint action to make life better is irresistible. Of course, better sometimes lies in the eye of the beholder. What one person sees as the key to prosperity, another might see as the path to disaster.

Especially since the financial crisis and Great Recession of 2007-2009, the divergence of views on economic policy has troubled me. In part, this reflects my (probably mistaken) sense that I had a handle on desirable economic policy from my experience with the economic development agency of the State of Hawaii in the late 1990s (Department of Business, Economic Development and Tourism). In the early 2000s, Hawaii was finally coming out of a long period of low/no growth, a period made even more galling by the remarkable economic performance of the U.S. as a whole. As I transitioned from the economic development agency back to the university, I tried to capture my understanding in Hawaii Becalmed: Economic Lessons of the 1990s (University of Hawaii Press, 2002).

In light of that understanding, the events and subsequent policy discourse of 2007-2009 were perplexing. Suddenly, economic inequality was an issue. Economic growth took much longer to revive than expected. Unemployment rates came down agonizingly slowly. Labor participation rates fell. An opioid crisis bloomed. Suicide rates rose.

What the hell? I—and many others—thought.

I started working on this book as a way to explore one corner of these issues—the steady automation of work and its social implications. Ultimately I was interested in assessing the plausibility of some form of universal basic income as part of a solution.

I am not an expert in these areas. Therefore this book presents a fictional narrative of what, I hope, is one plausible story for how we might get from here to there.

For those interested in social science assessments of the situation, there is much to contemplate. Reading that I found helpful included articles by Joel Mokyr, Chris Vickers and Nicholas L. Ziebarth, The History of Tech Anxiety and the Future of Economic Growth: Is This Time Different? and David H. Autor, Why Are There Still So Many Jobs? The History and Future of Workplace Automation. Both articles appear in the Summer 2015 Journal of Economic Perspectives (29:3). Also helpful were books by Richard Baldwin (The Globotics Upheaval: Globalization, Robotics, and the Future of Work, Oxford University Press, 2019) and Anne Case and Angus Deaton (Deaths of Despair and the Future of Capitalism, Princeton University Press, 2020). Jeremy Rifkin’s The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era (G.P. Putnam, 1995), while dated and coming from a distinct political perspective, was worth reading. Readers may also find helpful Andrew Yang’s The War on Normal People: The Truth About America’s Disappearing Jobs and Why Universal Basic Income Is Our Future (Hachette, 2018). Finally, for a contrary perspective, arguing that recent technological change is not particularly significant by historical standards, Robert J. Gordon’s The Rise and Fall of American Economic Growth: The U.S. Standard of Living Since the Civil War (Princeton University Press, 2016) bears study. This list is far from complete.

I thank several people for helping me, while absolving them of responsibility for the result. I am especially grateful to Dick Pratt, a friend and former colleague, who participated with energy and insight in the early stages of my reading and thinking. Dick then later read the manuscript with care, making suggestions and comments, not all of which I adopted. Deborah Lang and John Washburn also read the manuscript in its entirety, offering observations and encouragement. All of this is much appreciated.

Chapter 1: The Challenge

Tony watched eagerly as he stood on a platform thirty feet above the factory floor. A steady roar enveloped him, composed of operating machinery, grinding metal, alarms and bells sounding, and periodic shouts among the eighty workers on the production line. Flashes of electronic and metallic movement combined with the rumble to give the huge space the feeling of an immense, active organism.

Tony was watching the production of batteries for electric vehicles at Lambert Automotive. He had arrived yesterday, having been sent by his company, Intelligencex, to consult on automation possibilities. Tony had been with Intelligencex for almost a year, hired right out of engineering school. He’d worked on a number of project teams with the company, developing tailor-made, technology-oriented, business process renovations. Exploring options for Lambert was Tony’s first solo trip for the company.

A couple of Lambert’s directors had been eager to move toward automating. The promise seemed substantial. Developments in computerized machining, robotics, and automated processes had advanced to the point where the cost of battery production might be cut in half. That would be enough to give Lambert a substantial advantage in the small, but growing market for electric vehicles.

Other directors were less sure.

Lambert had been operating since before World War II. It became an established player in the post-war period, riding the huge wave of suburbanization, interstate highway development, and the American car culture. Lambert had prospered, supplying a variety of automotive parts to the industry. In the last thirty years, foreign car manufacturers had made substantial inroads, but Lambert had always been able to adjust and find niches.

The company had acceptable relations with its unionized workforce. There were the usual tensions at contract renegotiations. In the 1970s there had been two bitter strikes. But nothing as serious since then. Over time, the workforce had been pared, mostly from attrition. Part of this was lower demand because of increased competition. Another part was the steady development of automated manufacturing, including robotics.

On the Board of Directors, the move to develop specialized batteries for electric vehicles had been the outcome of intense debate. For the most part, the division fell along generational lines. Younger board members saw electric vehicles as the future; older members, particularly those with long histories at Lambert, were more cautious—unconvinced that the new technology was worth the investment.

Eighteen months later, the Board was convinced. The batteries were the fastest growing revenue producer for Lambert, and it looked as though this was just the start of a new era.

The next fight was over how to produce the batteries. Re-tooled existing manufacturing practice had been sufficient to get into the new game. But technology was changing rapidly, and now the question was whether to risk moving fully into automated production. It would require significant investment. But it would lower the variance in quality with existing methods. And it could ultimately reduce the number of required workers from 80 to less than 10.

From management’s perspective, the promise lay in cutting the cost of production in half. From workers’ perspectives, the threat was the loss of dozens of well-paid, union jobs.

As a start on identifying the scope of the challenges, the Board had agreed to hire a consultant to develop options for the extent of automation, the costs, and the likely returns. This was where Tony and Intelligencex came in. Tony’s job was to gather the information for this analysis, coordinate with Intelligencex staff to produce a recommendation, answer resulting questions, and help Lambert reach a decision about how to proceed.

Over the next few weeks, the challenges became clearer. There were plenty of technical difficulties, but these were standard. Tony was confident that his education, experience, and his Intelligencex colleagues could resolve those problems. They did this for a living.

He felt less confident about the human difficulties. Tony had felt some tension in his early meetings with the Board, and then again later with senior management. But he’d dismissed these as the likely residue of the decision to explore automation at all.

As Tony worked, observing operations, interviewing managers and workers, it was clear that many held deep suspicions about what was going on. Workers had seen this before—both at Lambert and at other companies. Consultants suddenly on the floor, unusual management activity and talk, notification of work rule changes, new investment, and reduced staffing. The displacement of manufacturing jobs had been an industry-wide phenomenon for years. Now another wave seemed to be approaching Lambert.

Lambert management had assured Tony that they could handle it. Yes, things might become uncomfortable, they said, but there were long-standing relationships with the union. Besides other companies had managed this process and so could Lambert.

And yet, as Tony’s work continued, irritating little accidents began to happen. Drafting instruments misplaced, a piece of equipment moved, a laptop missing for a couple hours. Tony became more diligent about securing tools and documenting the status of the work each day. Lambert management took the unusual step of issuing an aggressive company-wide memo warning of immediate dismissal and legal consequences for anyone engaged in sabotaging the consultant’s work. The accidents stopped. But tension ratcheted upward.

At the same time, discussions between union officials and Lambert management intensified. It was too early for formal negotiations over work process changes. Detailed decisions about the new direction had not been made. But the two sides agreed to begin meeting informally in the spirit of transparency—and in an effort to minimize disinformation. The major issues involved just how much production-level employment would fall and the terms of severance compensation over and above existing contract language. In principle, there was scope for a resolution. The expected reduction in production costs could make it possible to compensate those who would be let go. The problem, of course, was that it was a zero-sum game. The portion of the surplus that went to one side would not go to the other. That put an underlying edge in the discussions.

Tony was not involved in the labor relations talks. Indeed, Tony had the sense that his input was not welcome. So he kept his head down, diligently followed the Intelligencex analytical process, and wrapped up the on-site work.

On his way to the airport, Tony reflected on the conversation with the Board’s technology committee earlier that morning. He had reported his tentative findings, would return to Intelligencex’s headquarters to finalize the report with colleagues, and then forward the final product to Lambert.

Tony found it difficult to contain his excitement in the meeting. The numbers lined up beautifully. Newly-developed technology could dramatically improve the efficiency of Lambert’s battery production. That would put Lambert in the vanguard of suppliers to electric vehicle producers, lowering the vehicles’ costs, and advancing the coming revolution in the personal transportation industry.

Not beside the point, Tony smiled to himself as the cab pulled up to the airline terminal, it looked like his first solo work for Intelligencex would be a homerun.

Two days later on Friday morning, a mid-level Lambert manager took offense at a sarcastic comment by one of the senior production line workers.

What did you say? the manager asked aggressively. He had been working ten-hour days for the past week, developing analyses on how to minimize job displacement.

The line worker hesitated, normally unwilling to engage in higher confrontation. But the situation wasn’t normal. It looked like jobs would start disappearing. At his age, it would be impossible to find a comparable position. Though who would be laid off remained to be determined, it felt like the work now amounted to digging his own grave.

You heard me.

I did. And I won’t take that crap from anyone.

Big fucking deal.

They were nose to nose, both aware that workers in the area were watching.

A year ago it would have been easy for either to step back. Or for someone to step in to calm things down. It was much harder this morning, either because of the long hours, or the real threat to livelihoods, or both.

One or the other made physical contact. And that was it.

The line worker head butted the manager, whose nose exploded in blood as he fell to the floor. People started yelling.

The line worker hesitated, shocked at what he had just done. Oh god, he whispered as he leaned over the manager trying to see how bad the damage was. The manager threw a punch from the floor that landed on the worker’s temple, staggering him back.

Now people were crowding around. Some were trying to break up the fight. Others were urging it on. Someone pulled an alarm. In addition to the blood and the yelling, now a siren started to blare.

Those closest to the combatants succeeded in separating the two men. But the excitement was just starting on the periphery. Some shouted questions, asking what had happened. Others guessed at, or made up, the facts. People jostled each other. Someone shoved someone else. A punch was thrown. Then melee.

The tension that had been building for months burst like a swollen dam. Frustration, anger, and fear all contributed to several workers starting to take it out on their machines. Some beat on the computerized displays with whatever was at hand. Others wrenched wires and tipped over equipment. Glass shattered. The whine of broken machinery joined the pandemonium of the siren.

Employees, including security, ran on to the floor, pausing in disbelief at what they were seeing.

A majority of the production line shift had stepped back to avoid the fray. They gathered at the edges of the floor, watching a few of their colleagues go berserk.

A new set of sirens joined the cacophony. Police and firefighters began to arrive.

In the days that followed, the ramifications of the riot played themselves out.

Thankfully, no one was seriously hurt. The company suspended the production line worker and the manager pending an investigation. The suspension also applied to the dozen workers who engaged in destroying equipment—all caught on security video.

Production halted, and it was unclear when or whether it would be re-started. Line staff were furloughed.

The press had a field day. Predictably, the participants were labeled Lambert’s Luddites, and the events quickly became the focus of an on-going national debate about automation, labor displacement, and public policy.

Seven hundred