New Economic Order - Labor

Almost two years ago I wrote of what can be described as a New Economic Order. I basically said that the differences between the first world and the third world are closing and that although we in the U.S. may not start living like squatters and beggars any time soon, many characteristics of the less developed world are (shall we say) "developing" here in the U.S.

I read an essay today about changes in the labor market and labor force here in North America (and indeed throughout the industrialized world). It basically said that over the past 30 years or so we have seen an increase in high-skill, high pay jobs as well as low-skill, low pay jobs while those in the middle have been disappearing. The essay, a scholarly piece produced by one of the Washington think tanks, goes on to describe high-skill, medium-skill and low-skill jobs but basically the latter is limited to personal care (janitorial, restaurant work) security and motor vehicle operator type jobs.

This disappearance is due to a number of factors but the essay stated that for the most part it was caused by both the globalization (and therefore increased competition in) labor markets and the automation of many tasks. Add into that the cost of purchasing health insurance in the U.S. workplace and the choice between foreign labor and domestic is made for just about anyone contemplating business expansion in the near term.

It was interesting that the report's author stated that those jobs that have not been offshored or automated out of existence, fall into two skill categories: abstract and manual. Abstract requires analysis, judgement, language skills and tact. Manual are simply jobs that are routine but yet cannot be done by machine (yet).

Technology and Other Media Consumption

An earlier posting illustrated what could happen to sporting event broadcasts and the impact on Joe Six-pack. I basically argued that interactive media or the Internet, or whatever television becomes could allow the viewer to customize his angle or view of the game through a specific camera among the many that are in place at the arena. Or maybe the viewer could select to display certain game or historical statistics instead of the score or time remaining in the game. S/he could even change the font size or screen location of this information.

Well, I think the technology is in place to do similar things with other content that has been broadcast conventionally on television and radio. Of course, it all depends on the establishment of trust and adoption of a system commonly called, "micro-payments." This is a method whereby a viewer and purchase something online or otherwise through an interactive device in much the same way that we purchase books or other merchandise through Amazon or eBay. Except that in this case, the commodity is priced lower than anything most of us have purchased online previously.

If it were possible to pay 50 or 75 cents, perhaps several times a day without any onerous transaction fee, then a person could request almost any television programming from its owner (United Artist or ABC/Disney or Sony Pictures, etc.) who would in turn be earning at least a little bit on content that otherwise would be idle inventory.

Services like Pandora, and others which have come and gone like Seeqpod and Imeem have attempted something along those lines. While it is now possible to buy songs individually without being forced to buy the entire CD, a system of music distribution could have followed an on-demand model that goes something like this: If I'm having a party at my house, I could pre-select 30-40 songs from a list offered by a digital jukebox. I could pay maybe $20 (thus keeping it below the sale price of each song if purchased separately) and have the music for my party taken care of. Or perhaps I could purchase a 30-song credit from the digital juke-box and select the music as I go along or allow my guests to.

It maybe too late for this kind of service since the "rental" price for music would have to be well below the sale price, which appears to be about $1 per song, these days. Else there may not be much interest. And of course, the music rights owners would need some assurance that end-users couldn't simply make illegal copies of the music as it streams across their computers' hardware.

Of course, $1 per song may be affordable, but buying simple MP3 files and loading up your hard disk is not the same thing as creating a home juke box. The songs, artists, albums and other data have to be searchable and browsable, and it would be nice to include links to skip to another or to just move around the collection easily without relying on the simple files/folder browser. That navigation and search would take some programming effort but is probably a service that some people would be willing to pay for.

Many (but presumably not nearly all) movies, television and music exist in digital form but unfortunately are not being exploited as they could be (or could have been) by media companies. At the right price, this idle inventory could be generating a previously unrealized income for the copyrights holders. Someday it will be.

Are Broadcasters Next?

I listen to a lot of podcasts and increasingly it's becoming clear that some content is not being read by a person and spoken into a microphone but rather the text is converted to voice automatically using software. I can tell not because the voice sounds anything like the 1960s version of what Hollywood thought robots would sound like in the 21st century but because of slight mispronunciations and misinterpretations of the words. Two of these that come to mind are created by BusinessWeek and the Economist.

I wonder if it won't be possible one day to take a text document and use a piece of software to generate a voice narration of the words using the voice of famous people. There are hundreds of hours of archived sound recordings of famous people and presumably machines can parse a person's voice into just about anything you want it to be. So if you fed both the text and corresponding audio files of the entire corpus of Walter Cronkite (for example) into an artificially intelligent machine, then the system could eventually "learn" how Cronkite would say just about any word, syllable or phrase.

This system could then take any text you submit and generate a pretty damn good impersonation of Cronkite reading what you've written whether or not he's ever been recorded saying it. The system will have learned the idiosyncrasies of an individual's voice, inflection, pronunciation, pauses, etc. to fool perhaps even the speaker's family.

The implications are of course huge. First there are legal challenges. Would it be legal to take the voice of Michael Jordan and use it to pitch a sneaker brand that he is not currently affiliated with? Obviously not but in today's lawless web environment, who's gonna stop it? You could get almost anyone to say almost anything, I would imagine, including U.S. presidents making promises that they never made and holding them accountable to them. So there's fraud to be considered.

But how about the convenience factor? Let's say a manufacturer of designer clothes wants Whoopi Goldberg to be their spokesperson. She hasn't got the time to go into a studio and read a bunch of copy several takes in a row. So she signs permission for the company to take her voice and the aforementioned system that can create the illusion that she is talking when in fact she's relaxing at home. She (or her agent) would of course have to authorize the content and use of her vocal likeness, but the bottom line is, I think the technology is probably here already.

But alas, like so many modern phenomena, the law lags behind.

Technology and Televised Sports

I posted something about technological applications in sports refereeing. I believe that the role and responsibility of sports officials will change in the coming years owing to the implementation of advanced (mostly sensor) technology to more precisely measure what these men and women currently have to eye-ball and make snap decisions about. The technology is available; the impediments are economic and cultural. The latter is a question of whether owners, players, coaches, fans and officials themselves are willing to try them. For more, see: http://historicalaccident.blogspot.com/2009/05/technology-and-sports-referees.html

The technology is also available for a vastly different experience for the home spectator of professional sports. With the marriage of television and the Internet, the possibilities of customized broadcasts in sports could create a new generation of sports programming.

For example, in addition to watching the action on the field or court, viewers are also shown a variety of statistics and other graphics (including the current score of the game) which the broadcasters feel are timely or somehow relevant. But soon it will be possible to move those decisions from the producer to the consumer. We at home watching a baseball or basketball game will be given a menu of choices regarding which statistics to display and when. We could view on demand the game's leaders in scoring or hits or yards rushing, for example. We could even change the size and font of the display of the numbers or graphs including moving the score display to the upper or lower left corner. Those with small television screens or with poor eyesight could change the size of the display.

In addition to score or statistical displays-on-demand, there will be other options for television-based sports viewing. Most broadcast sporting events today are covered by several cameras and the number is likely to grow. It is not unreasonable to expect that one day soon certain games--particularly championships--will be covered by a dozen or more cameras. There are overhead cameras, end-zone, side-line and a host of other camera placements at sporting events.

Soon the sports fan at home will be able to choose through which camera they prefer to view the game and when. Replays, currently possible using a digital video recorder, will be expanded to be used in every camera in the arena or stadium. I can see the development of a broadcast feature, something like, "The AT&T Sideline Monitor".

Because professional sports today is like every industry facing a diminishing marginal return on it's investment, it will have to devise new innovations, products or services which tempt the consumer to stay loyal. The interactive nature of viewing sports events is one way in which I believe this will happen.

Robotics

The use of robots is becoming more and more common if you believe what you read in the newspapers. I suppose it's a lot like the introduction of computers: many of the appliances and implements that we used every day such as automobiles, VCRs, calculators, televisions and microwave ovens had computer chips embedded as early as the late 1970s but most of us didn't buy a personal computer until the early-mid 1990s. The way I understand it, robots are currently used in manufacturing, medicine and the military but quite soon their use as personal devices in our homes will become widespread.

The only instance that comes to mind is the Roomba, a home vacuum cleaner that is self-propelled and that covers the floors without any need for human intervention after powering on. Throughout most of the 20th century, American popular culture characterized robots as ultimately evil and destined to turn against their human owners or operators. The scientist who invented the robot was usually evil and created the device for nefarious purposes. But I understand that in Japan, the land of Godzilla and other (according to American popular opinion) campy science fiction, robots are seen as benign and actually welcomed. They are expected to care for the elderly or the children and take the drudgery out of routine housework.

But as far as more mainstream applications, I can see a lot happening in a short time. I should first emphasize though, that modern robots are very sophisticated and continue to "learn" after they are implemented. For this reason they can probably take on a large number of our more routine jobs. The first that comes to mind is just about anything that's retail. For stores which sell those things that simply must be bought (and examined beforehand) in person, it is only a matter of time before the cashier is a robot which can respond to your routine questions regarding discounts, store hours, return policy, etc. They may also be able to tell you quite a bit about the product and variations, uses, etc. but I wouldn't expect that immediately.

They say that the automatic teller machines where most of us get our cash has over the years replaced something like 15,000-20,000 bank tellers. I can see the same thing happening to many retail cashiers.

In stores which remain physical entities (i.e. not strictly selling online) and which sell extremely uniform products with brands that everyone trusts (i.e. drugstores, discount department stores) it is entirely plausible that the cashiers will be replaced in part by robots. So in a place like Rite-Aid, Wal-Mart, Walgreens, etc. where each item has a radio-frequency chip, the $9-10 an hour cashier could be most economically replaced by a robotic cashier which could total up an order, desensitize the micro-chip, place it in a bag or box and process payments electronically or with cash. As long as the customer doesn't have too many questions although even there robots are becoming sophisticated enough to decipher a variety of human speech and respond in an intelligible fashion.

The whole question is--as always--economics. Will it be cheaper to purchase these things or to pay clerks the going rate to do the same thing? That of course depends on the going pay rate, which may not include health or other benefits, schedule disruption by absent or sick employees, and the limits that an 8 hour work day imposes. For robots, these costs are weighed against the price of one of these robot-cashiers, their expected useful life, requirements for electricity and maintenance, etc. and the fact that they can work 24/7.

But I'll bet that unless entry level cashiers start selling their labor extremely cheap and are very reliable, at least some retailers will start implementing customer service robots.

New Economic Order

I recently suspended home newspaper delivery while I am on vacation. However I wonder if home delivery will be an option when I get back. Traditional print newspapers appear to be dying off, supplanted by news sources on the Internet. Some newspapers will survive as websites but I can't see how the delivery of a printed edition can survive except where subscribers are willing to pay 2-3 times what they are currently charged.

Some blame the newspapers themselves for not seeing these changes coming or for not reacting to them appropriately. The same arguments are made regarding automobile manufacturers who took the competition from Japanese automakers too lightly and are now facing insolvency.

We could assign blame to just a few individuals perhaps but there is a quote which bears repeating here. I'm afraid the exact phrase and originator escape me now but it goes something like this: "It is hard to get a man to believe something when his earning a paycheck depends on his not believing it."

Free Higher Ed Lectures but is Certification What Employers Want?

College level courses are available to a larger audience than ever before thanks to digital media. Many of them are available at no cost. YouTube for example has an 'edu' channel which carries lectures and other educational videos. This means that a person can essentially attend college classes without paying any fees. They won't take any exams, turn in any term papers or receive any grade and most importantly they won't receive any credit. But at least some of them will learn something about the course subject. Many will fail to stay with the entire series of lectures, but others will become highly engaged and perhaps know as much or more than the on-campus student who pays tuition and completes the course in person.

This has been a long time coming. Since the invention of moving pictures, radio and television, people have been eagerly anticipating a change in the delivery of education and a much broader reach, serving millions of people who otherwise would never receive any comparable instruction.

However, the other (and for many people, primary) objective of higher education is in securing employment. Independently watching hours of college lectures supplemented by readings on one's own offers no such assurance. In the past, employers traditionally have depended on colleges and universities to provide some assurance that job applicants have absorbed the right information and went about learning in a disciplined, systematic manner. For example, at one time the baccalaureate ensured that students are able to compose a thoughtful essay that supports a certain viewpoint and cites facts to that end. But from what I read in the newspapers, many of today's college graduates lack many skills that an undergraduate education previously conferred. It seems today that paying tuition, attending class, completing assignments (for better or worse) and basically acting responsibly are all that seems to be needed to earn a bachelor's degree.

I wonder then about giving away content (in the form of free online lectures) when presumably many people pay tens of thousands of dollars for the same content. Are they paying for the information that could before now only be obtained by enrolling in an institution of higher learning? Or are they buying something else?There is no guarantee that a job is forthcoming for either the independent student or the matriculating, tuition-paying student. The only difference is that the latter (for the time being at least) is more likely to be invited to an interview.

Insurance at Risk

The information access revolution taking place over the past 10-15 years has had a number of unintended consequences. Certain professions have been marginalized as with many technological innovations. The rise of do-it-yourself and sharing among amateurs have allowed us to undertake things with more confidence and without the need to consult an expert in many cases. Personal privacy has been put in doubt and the concept of privacy will have to be re-evaluated. Another unforseen change is an undermining of the notion of "pooled risk," a principle that modern insurance is based on.

Insurance companies offer to pay for personal loss of a subscriber only if the pool of buyers is large enough to sufficiently cover the costs of a catastrophe and if the estimated frequency of such a catastrophe is low enough to ensure that claims do not exhaust the accumulated subscriber payments.

But today we know (and can know) a lot about people including an increasingly accurate estimate of their chances for encountering misfortune. With medical records, increasingly sophisticated actuarial tables, public health data, genomics and other information sources that can more accurately predict the likelihood of certain occurrences, insurance companies will become more discriminating in the policies they write and their premiums will more accurately reflect the chances that a subscriber will one day make a claim. Insurance policies will soon be based on data sources that were unavailable just a few years ago.

Computer models which estimate rates of crime, traffic, health problems and which also assess the monetary level of potential damages from these are getting better all the time. I suspect that soon they will be so good as to almost render the notion of pooled risk inconsequential. The uncertainty accompanying risk will be reduced so much that the marketplace for insurance will become nearly unsustainable.

For example, most of us know today that the vast majority of lifetime expenditures on health care take place within the last year of a person's life. The hospitalization, home care, therapies and drugs that characterize the chronically ill octogenarian's last year dwarfs expenditures made throughout his or her life. Of course, there is the possibility of catastrophic illness throughout our lives (such as cancer or permanent disability from accidents) but if we could eliminate those freak occurrences, we would all delay health insurance purchases until we were at retirement age since we probably won't need much in the way of benefits until the last years of our lives. (Health insurance is an odd case and I only use this example to illustrate the way that emerging information resources could guide decisions on insurance purchasing.) In fact, government regulation is the only thing keeping the health insurance market afloat as many insurers would eagerly cancel policies for those who develop a predisposition to illness. Such as the elderly.

Taken together with the burdensome economic situation that many insurance companies are facing, it may be that we can say goodbye to insurance as we have known it for many years. After all, if we can know so much about a person's chances for encountering misfortune, then the risk is removed for both parties. Only those who learn that their chances of having an accident or illness are high will purchase a comprehensive policy but insurance companies will only issue policies with large coverage to those whose chances of an accident or illness are very low.

This assumes that information flows freely; it is likely that corporations (insurance companies and their finance parent companies) will have an advantage in the collection and processing of this information.

But that's a topic for another post.

Market State v. Nation State

Many people (including myself) have said that the modern nation-state--just over 250 years old--is nearing the end of its useful life. Some day I will go into the reasons or the causes but for now I will just point to the many others who have said the same thing. The lesson may be that governance over more than just a few hundred thousand people is impractical in today's world but regardless, the days of the nation-state are numbered.

Some say that it will be replaced with what could be characterized as a market-state. I don't know much about this theory except that it appears to align with the long-standing assertion that we owe more and more of our allegiance and livelihood to the private sector (corporations, etc.) than to the government to which we remit our cash in the form of taxes. Again, I will save the details on corporate rule for another post but only note that the market-state, most commonly associated with the author, Philip Bobbitt, supports the growing recognition that multi-national corporations rule the world--including those presidents, prime ministers, legislators and members of parliament who are purported to govern.

Reconciliation of Historical Disparities in Standards of Living

A reconciliation between the standards of living in the industrialized countries of Europe and North America on one hand and the developing countries of Asia, Africa and Latin America is inevitable. Just as in the physical sciences, particles with a negative charge and those with a positive charge cannot exist for long without a spark jumping between them to eliminate the disparity, the vast uneven-ness of our income and wealth distribution over the last 50-100 years will inevitably change.

Nothing illustrates this more clearly than the almost irresistible flow of migrants from these poor countries to Europe and North America in search of work and wealth--even in jobs requiring heavy physical labor and paying near minimum wage. Migrants save and borrow what is to them large sums of money only to spend it on human smugglers and often extremely dangerous transport across desert or sea to reach the place where the industrial revolution cultivated an opulence that these migrants feel they can achieve only by risking their homes, years away from their children and in some cases, their very lives.

And because of the difference in numbers between the global haves and have-nots, it is more likely that the reconciliation which takes place will mean the standard of living in the industrialized rich world be reduced far more than they will be raised for the poor, developing world. In other words, U.S. lifestyles will fall far more than African lifestyles will rise. Most of us would agree that despite their desire for western lifestyles, it is unsustainable for 2 billion Chinese and Indians (to say nothing of the others) to eat meat and have personal and recreational use of automobiles on the level that has existed in North America for so long. There are just too many poor and too few wealthy for the reconciliation to happen any other way.

Still, some friends of mine argue that there is no solid reason why this is going to happen. They believe that things will stay basically the same as they have throughout their (admittedly short) lifetimes. But I answer that what I call the "Third world-ization" of the U.S. is happening now. Consider the characteristics of what we traditionally call a Third World country:

• Enormous disparities in wealth and a very small middle-class
• Crumbling infrastructure (e.g. roads, bridges, public utilities)
• The export of raw materials and import of finished goods

These are only a few but I think any first-time visitor to the less developed world notices these things. What they may not notice is that we are beginning to see these developments in the U.S.Clearly a middle class is growing in the less developed world. For most of the last century, these countries were characterized by extreme wealth among a small minority and grinding poverty for an overwhelming majority. The increasingly easy of movement of capital, information and labor occurring in the last 25 or so years facilitated economic investment by multinational corporations and that has brought millions out of poverty. (There have been harmful by-products of this investment by foreign corporations, but I will leave that for another essay.)