Baldwin - The Globotics Upheaval

THE
GLOBOTICS
UPHEAVAL

Globalisation,
Robotics, and the
Future of Work

RICHARD BALDWIN

CONTENTS

Hang gliding is the ultimate thrill sport, but its not as dangerous as you might thinkthanks to the US Hang Gliding and Paragliding Association (motto: Pilot safety is no accident). To set up an online accident reporting website, the Colorado-based association signed a contract with California company Hathersage Technologies. The trouble was that Hathersage didnt have employees with the necessary skills.

Francis Potter, Hathersages president, wasnt worried. He planned to recruit all the talent he needed within days, and pay them far less than the going wage. This was not foolish optimism. Potter had a secret up his sleeve. Using a web platform called Upwork, which is something like eBay for freelancing, he hired engineers from Lahore, Pakistan, to help him do the job. Potter is a big fan of foreign freelancers.

There are really talented people who are just looking for the right opportunity to help on interesting projects. Upwork allows ordinary businesses to tap into latent capability and energy all over the world, whether in a basement in Siberia, a family house in Cambodia, or a small office in Pakistan, he wrote.

If you look this straight in the eyes, youll see it for what it is. It is US workers facing direct, international wage competition. It is highly skilled, low-cost foreign workers working (virtually) in US offices. Using foreign-based freelancers may not be quite as good as using on-the-spot workers, butas Potter can attestit is a whole lot cheaper.

Think of this as telecommuting gone global. Think of it as telemigration.

TELEMIGRANTSNEW PHASE OF GLOBALIZATION

These telemigrants are opening a new phase of globalization. In the coming years, they will bring the gains and pains of international competition and opportunities to hundreds of millions of Americans and Europeans who make their living in professional, white-collar, and service jobs. These people are not ready for it.

Until recently, most service and professional jobs were sheltered from globalization by the need for face-to-face contactand the enormous difficulty and cost of getting foreign service suppliers in the same room with domestic service buyers. Globalization was an issue for people who made things; they had to compete with goods shipped in containers from China. But the reality was that few services fit into containers, so few white-collar workers faced foreign competition. Digital technology is rapidly changing that reality.

Way back in the old dayswhich means 2015 on the digitech calendarthe language barrier and telecom limits restricted telemigration to a few sectors and source countries. Foreign freelancers had to speak good-enough English, and they were limited to modular tasks. Telemigrants were common in web development, and a few back-office jobs, but little else. Things are different now in two ways.

Machine Translation and the Talent Tsunami

First, machine translation unleashed a talent tsunami. Since machine translation went mainstream in 2017, anyone with a laptop, internet connection, and skills can potentially telecommute to US and European offices. This is amplified by the rapid spread of excellent internet connections. This means that people living in countries where ten dollars an hour is a decent middle-class income will soon be your workmates or potential replacements.

Chinese universities alone graduate eight million students a year, and many of them are underemployed and underpaid in China. Now that they can all speak good-enough English via Google Translate and similar software, special people in rich nations will suddenly find themselves less special.

Think about that. Then think about it again.

This international talent tidal wave is coming straight for the good, stable jobs that have been the foundation of middle-class prosperity in the US and Europe, and other high-wage economies. Of course, the internet works both ways, so the most competitive rich-nation professionals will find more opportunities, but for the least competitive, it is just more wage competition.

Second, telecom breakthroughslike telepresence and augmented realityare making remote workers seem less remote. Widespread shifts in work practices (toward flexible teams) and adoption of innovative collaborative software platforms (like Slack, Asana, and Microsoft 365), are helping to turn telemigration into tele-mass-migration. And there is more.

This new competition from remote intelligence (RI) is being piled on to service-sector workers at the same time as they are facing new competition from artificial intelligence (AI). In short, RI and AI are coming for the same jobs, at the same time, and driven by the same digital technologies.

WHITE-COLLAR ROBOTSNEW PHASE OF AUTOMATION

Amelia works at the online and phone-in help desks at the Swedish bank, SEB. Blond and blue-eyed, as you might expect, she has a confident bearing softened by a slightly self-conscious smile. Amazingly, Amelia also works in London for the Borough of Enfield, and in Zurich for UBS. Oh, and did I mention that Amelia can learn a three-hundred-page manual in thirty seconds, can speak twenty languages, and can handle thousands of calls simultaneously?

Amelia is a white-collar robot. Amelias maker, Chetan Dube, left his professorship at New York University convinced that using telemigrants from India would be nowhere near as efficient as replacing US and European workers with cloned human intelligence. With Amelia, he thinks he is close.

If you look this straight in the eyes, youll see it for what it really is. It is zero-wage competition from thinking computers. Amelia and her kind are not enhancers of labor productivitylike faster laptops, or better database systems. They are designed to replace workers; thats the business model. Amelia and her kind are not quite as good as real workers, but they are a whole lot cheaper, as SEB can attest.

These thinking computers are opening a new phase of automation. They are bringing the pluses and minuses of automation to a whole new class of workersthose who work in offices rather than farms and factories. These people are unprepared.

Until recently, most white-collar, service-sector, and professional jobs were shielded from automation by humans cogitative monopoly. Computers couldnt think, so jobs that required any type of thinkingbe it teaching nuclear physics, arranging flowers, or anything in betweenrequired a human. Automation was a threat to people who did things with their hands, not their heads. Digital technology changed this.

A form of AI called machine learning has given computers skills that they never had beforethings like reading, writing, speaking, and recognizing subtle patterns. As it turns out, some of these new skills are useful in offices and this makes white-collar robots like Amelia into fierce competitors for some office jobs.

The combination of this new form of globalization and this new form of roboticscall it globoticsis really something new.

The most obvious difference is that it is affecting people working in the service sector instead of the manufacturing and agricultural sectors. This matters hugely since most people have service-sector jobs today. The other differences are less obvious but no less important.

WHY THIS TIME IS DIFFERENT

Automation and globalization are century-old stories. Globotics is different for two big reasons. It is coming inhumanly fast, and it will seem unbelievably unfair.

Globotics is advancing at an explosive pace since our capacities to process, transmit, and store data are growing by explosive increments. But what does explosive mean? Scientists define an explosion as the injection of energy into a system at a pace that overwhelms the systems ability to adjust. This produces a local increase in pressure, andif the system is unconfined or the confinement can be brokenshock waves develop and spread outward. These can travel considerable distances before they are dissipated, as one scientific definition dryly described the devastating blast wave.