Missing in the future of jobs debate: the elasticity of human needs

Hari TN July 3, 2018 8 min

There is a lot of debate on whether Industry 4.0 with a strong underpinning of artificial intelligence (AI) and machine learning is going to result in large-scale unemployment. This seems a bit odd because neither technology nor automation is a 21st-century phenomenon! They are as old as humanity itself, and if this appears an exaggeration, then they are at least as old as the industrial revolution at least.

The battle between man and machines goes back centuries. At one point of time, the worry was what would happen if spinning machines replaced weavers and if steam engines took the place of horse carriages. In more recent times, the worry has been about the impact of self-driving cars, automated checkout counters, and other applications of AI.

The central theme of the debate has always been about whether technology is replacing humans or just easing workload.

The debate has often been lopsided and has drawn focus to the job losses induced by technology changes simply because job losses tend to attract a lot more attention and the cause-effect is more perceptible.

But, some diligent study will show you that most innovations in technology have been about being able to do something that could not be done before. Or, doing something on a scale not seen before. They have rarely been about exactly replacing what one individual was doing.

Take the case of the famous “Spinning Jenny”. Weavers went out of business but this innovation helped clothe the world, which would never have been possible otherwise. The price of clothing dropped to such a low level that even the poor could afford clothing. Steam engines put horse carriages out of business but reduced the cost of transport so much that – along with subsequent innovations such as containerisation – it transformed the world into a global village; which would never have been possible with horse carriages. People travel more and take up work far from their places of birth.

Machines that helped dig earth faster, along with dynamite, did not replace human labour. On the contrary, they helped humanity build dams and skyscrapers, which would never have been possible without these innovations. Bigger projects, the Suez and Panama canals, were undertaken — and the need for human labour increased like never before.

Banking software did not displace bank workers or clerks. Instead, it helped lift customer experience to unimaginable heights.

Enterprise resource planning software did not replace clerks who maintained excel sheets. It eliminated chaos and allowed companies to manage operations better without crumbling under their own weight — allowing them to grow and create more jobs.

The electronic photocopier did not really reduce or kill jobs. Instead, the volume of photocopying jumped more than a hundred-fold and even the less important documents were being photocopied.

Most innovations in the field of medicine allow far more procedures and cures than were conceivable earlier. This resulted in the opening up of super-speciality hospitals and creating employment for doctors, nursing staff, technicians, and workers in medical equipment manufacturing.

Broadband internet in itself has created millions of new jobs. The entire offshore services industry has grown on the back of increasing internet speed. Several startups are using technology every day to solve real problems on the ground and in the process creating millions of new jobs (at all levels – right from delivery boys and warehouse staff to AI and analytics engineers).

What the doomsayers are missing

This brings us to a very interesting point: the apostles of doom in the future of jobs debate have ignored the most important variable in the whole equation: the elasticity of human needs. They assume that human needs are limited and the number of jobs fixed. They see human society playing a zero-sum game. Therefore, if an individual is replaced by a machine, it is one job lost.

The reality is that human needs are infinitely, and I repeat infinitely, elastic. When one need is fulfilled, many new needs are created.

A hungry person first needs food. In this state, almost any food will do. When that need is met, she will want tastier food — even exotic food imported from halfway across the world. Only rare and important documents were photocopied before the invention of the electronic photocopier, but today documents are copied without a second thought.

Some decades ago, we were happy to get from Delhi to Bangalore in 48 hours. Now, everyone wants to make this journey in three hours. Work on commercialising the ‘Hyperloop’ is on at a frenetic pace. Water at the turn of a tap and electricity at the flip of a switch were not there for most people until recently.

The list is endless. Without this phenomenon of new needs replacing old, life would be one boring affair.

The other phenomenon that the doomsayers are missing is that one innovation spawns another, resulting in a continuous web of innovation. This web of innovation is continuously, and rapidly, enlarging the pie of goodies available to society

Machines have taken on repetitive and laborious tasks but seem no closer to eliminating human labour than at any time in the last 150 years. Employment contraction in agriculture and manufacturing has been more than offset by rapid growth in the caring, creative, technology, and business services sectorsInterestingly, even the paragons of AI and automation, Google and Amazon, which have managed to emerge as near monopolies, have helped create a level playing field for smaller players in totally unintended and unforeseen ways. They are giving wings to aspiring craftsmen, aspiring chefs, small brands, wannabe artists and budding writers a chance to display and distribute their work at very low costs. You could create your own album and put it out on YouTube and expect viewers and followers! You could write an e-book, price it at whatever you wish and realistically hope to find a niche audience that absolutely loves what you write! You could whip up some delicious home-made food in your small kitchen and find a niche and loyal customer base without having to set up a restaurant and worry about scale.

A study by Deloitte on the relationship between jobs and the rise of technology by analysing census data for England and Wales going back to 1871 provides some interesting insights that should help settle the debate conclusively.

The high-level summary of its findings was that rather than destroying jobs, technology has been a “great job-creating machine”. Some nuggets:

– Machines have taken on more repetitive and laborious tasks, but seem no closer to eliminating the need for human labour than at any time in the last 150 years.
– Employment contraction in agriculture and manufacturing has been more than offset by rapid growth in the caring, creative, technology, and business services sectors.
– Hard, dangerous and dull jobs have declined because of technology. In contrast, ‘caring’ jobs like nursing staff, home or old age care workers, and teachers, to name some, have risen. Labour has shifted from being a source of power to the care, education and provision of services to others.
– Technology has boosted jobs in knowledge-intensive sectors and has shifted consumption to more luxuries.

Still, yes, old jobs are being replaced

And new skills are replacing older skills. The risk of existing skills (and, therefore, professions) being replaced by new skills (and professions) has always been there. However, when one avenue closes, others open up! While there will be short terms winners and losers at a micro level, at a macro level, technological advancements and innovation will continue to benefit society; even when they end up creating intelligent machines and algorithms!

Fraud detection was difficult earlier, for instance. So, companies painted every customer with the same brush. You could be a loyal customer with a telecom provider for six years but if you default on a payment once, you would be treated exactly like a regular defaulter. Today with AI, the provider would know how to treat the two cases differently. e-commerce companies routinely use AI to differentiate deliberate fraud from genuine mistakes. Here AI isn’t replacing a human. It’s helping humans do what was not humanly possible earlier.

Even in the offline world, gas marketer GAIL has begun to use drones to inspect gas pipelines passing through forests, rivers, environmentally sensitive areas, or inaccessible areas. Such preventive maintenance can help avoid disasters of the kind that killed 18 people in a pipeline explosion in Andhra Pradesh four years ago. Here, too, drones are not replacing humans. They are helping humans do what was just not feasible earlier.

I am with Peter Thiel when he says that machines created by humans are most likely to complement what humans do and not replace them. This has always been the case, and I believe, will be the future as well.

Hari TN heads human resources at BigBasket. He is also a strategic advisor at growth phase VC fund Fundamentum. An IIT-IIM alum, Hari has worked with multiple start-ups and has been through four successful exits in different industries: Daksh, Virtusa, Amba Research, and TaxiForSure. He co-authored Cut the Crap and Jargon – Lessons from the Startup Trenches, published by Penguin, and his next book Cutting the Gordian Knot – India’s Quest for Prosperity is under publication by Bloomsbury.


Visuals by Rajesh Subramanian


Updated at 08:40 am on July 3, 2018  to add the author's brief description and visual credits for the story.

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