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How Technology Is Effecting Society and Ushering In a New Era of Manufacturing

By Michael Lewis

technologyTechnology has been both a boon and a curse throughout history, upsetting the apple cart of the established order with new opportunities for some and great losses for others.

Consider the impact of the automobile, first on the horse and buggy industries, then on railroads. Television almost destroyed the movie business until the more creative people adapted. eBooks currently threaten longstanding bookstores and traditional publishers. The pace of technological advance has accelerated during the last half-century, challenging cultures, societies, and individuals to adapt to the new environment.

The benefits of technological advances are disproportionately enjoyed among the world’s communities, exaggerating the differences between those countries with stable, modern economies and those yet to develop. Even within a single economy, the benefits generally accrue to those who are better educated, more flexible, and less invested in the status quo.

In the past, technology primarily leveraged or expanded man’s physical and mental skills. The coming advances have the capability of replacing those skills, eliminating the need for man’s labor or direction. Simply stated, machines are capable of replacing much – if not most – of the jobs in our industrialized societies.

As the transfer occurs, how will cultures, economies, and political systems adapt? Will the future be the long-sought utopia, or the beginning of a cultural apocalypse, the societies depicted in science fiction novels such as “1984,” “The Hunger Games,” or “Soylent Green“?

Emerging Technologies

A recent article in the World Economic Forum listed the top 10 emerging technologies in 2014, claiming they will reshape our society in the future. They include:

  • Nanostructured Carbon Composites. The new material is claimed to be “lightweight, super-safe, and recyclable,” and will replace or substantially reduce such materials as steel and aluminum. As a consequence, automobiles will be lighter and require less energy to operate. The same benefits will apply to the manufacturing process, since lighter parts are easier to move, manipulate, and combine in the assembly process.
  • Grid-Scale Electricity Storage. Electricity is not easily stored, so society generally relies on the easily convertible chemical energy of fossil fuels (coal, oil, and natural gas) with negative environmental consequences. Wind and solar are intermittent sources of energy whose use is currently limited by an inability to store the energy for significant periods once produced. Developing an efficient, long-term storage capability will allow more use of the world’s intermittent energy sources and less environmental damage that is the consequence of burning carbon fuels.
  • Biotech Advances. Human microbiome and RNA-based therapeutics have the potential to eliminate disease and extend life, introducing a plethora of ethical issues such as the construction of artificial organisms, biological weapons, stem cell research, and genetic modification of humans. There are likely to be societal conflicts over the distribution of benefits produced through nanotechnology as well. These issues include unequal access to healthcare and technology breakthroughs, inequalities in education, intellectual property protection laws and systems, and limited consumer safety protection.
  • Brain-Computer Interfaces. In addition to potential benefits such as allowing quadriplegics to control artificial limbs, the technology has also provided a capability of introducing false memories, potentially controlling thoughts and behavior. A team at the State University of New York implanted electrodes in a rat’s brain “to control its movements, treating it effectively as a robot, making it do things it would never willingly do on its own.” While the purpose of the experiment is to develop the capability of searching for survivors in a collapsed building, for example, the transition to control of humans is not hard to imagine. Neuroscientists at MIT reported planting false memories in the brains of mice in July 2013. While the potential for good is enormous, there is equal risk that such technology will be abused.

This list is far from inclusive with advances, innovations, and inventions occurring in every industry and facet of daily human life. The capacity for historic good and benefit to mankind has never been greater in history, but nor has the potential for cataclysmic disaster.

Smart Machines

Smart machines are also displacing humans from many jobs. For example, the U.S. has used pilot-less drones (programmed to distinguish between “targets” and non-targets) in the Middle East wars for more than a decade.

“We are slowly surrendering our intelligence, our choice, our responsibility, to devices such as this,” states IBM Fellow Grady Booch in InfoWorld, claiming that such creations may eventually become sentient with human characteristics: self-awareness, the ability to set goals, and creativity.

Robots

Machines are used whenever operating environments are hostile or require strength, dexterity, or precision beyond human capabilities. And with the advances of artificial intelligence and digital neural networks, robots are becoming much more capable, even superior in some areas, than humans.

Automatic teller machines have largely replaced bank tellers and clerks, automatic picking machines dominate modern distribution centers, and robots do the majority of dangerous work in big city bomb squads. While there has been considerable controversy over computer/human chess matches, there is agreement that computers regularly compete and win against the highest level grandmasters, according to BBC News.

Hod Lipson, director of Cornell University’s Creative Machines Lab, claims his self-aware robots use feedback from their own limbs to learn to walk. He goes on to say that robots “can learn, understand themselves, and self-replicate.” In The Independent, Ray Kurzwell, Google’s chief engineer, projects that by 2029, machines will have emotional intelligence, make jokes, and even flirt. Emotional understanding is what separates computers and humans today – and that barrier may soon be crossed.

The New Shop Floor

In the last 50 years, the American workforce has changed significantly. According to MinnPost, in 1948, almost as many people were employed in manufacturing and agriculture (a form of manufacturing) as in services. By 2013, for every one person involved in manufacturing, there were more than six employed in services. According to The New York Times, in 1960, General Motors was the largest private employer in the country (595,200 employees) and manufacturers occupied 12 of the to 15 employers; in 2010, Walmart was the country’s largest employer (2.1 million), with only one manufacturing company in the top 10 (Hewlett Packard) and three in the top 15.

The causes of the American manufacturing decline are the outsourcing and offshoring of production for many products to countries with lower wages and the increased penetration of “smart” machines replacing human labor. Even though industrial production has substantially recovered from the recession of 2008, reaching its highest level in the past 20 years, it has continue to operate well under capacity (79.2%), according to Zero Hedge. (Industrial capacity is the Federal Reserve’s estimate of sustainable maximum output factoring in reasonable work schedules, time-offs, and availability of capital.)

Since December 2009, factories have lost a net 864,000 jobs that may never be replaced, and corporate profits have risen at an annualized rate of 20.1% since 2008. Not surprisingly, disposable income reflecting salaries and wages has barely increased at 1.4%, according to The New York Times. This difference can be attributed to decreased power of labor in the workforce as a consequence of greater use of technology in manufacturing companies of all sizes.

For example, if a manufacturer with 100 employees could produce 100 units per period in 1980, the same number of employees produced 289 pieces in 2012. Conversely, only 34.6 employees in 2012 were needed to produce the same quantity of pieces as 100 employees had produced in 1980.

Today, there are large, expensive smart machines in specialized factories that can run for days without requiring a person beyond someone to load and unload the machine. These machines can reduce labor by factors of 10 to 100 or even more. They work 24 hours per day, never ask for time off, and never take a vacation. They don’t require expensive benefits such as health insurance. As a consequence, a smaller and smaller manufacturing sector can out-produce the demands of the world.

technology

Where Do Humans Fit?

In the April 19, 2012 issue of Forbes, Natalie McCullough, chief marketing officer of ServiceSource, claimed, “Services, not manufacturing will revive the U.S. workforce.” Such optimism ignores the probability that the same technological factors that have affected manufacturing will undoubtedly reduce employment in the service industry.

For example, as products have become more durable, less expensive, and able to repair themselves, service jobs associated with repair of older products have been reduced or eliminated. Advances in technology have affected work across all service industries and occupations. Many supermarkets provide self-bagging and self-service checkout stations, investment portfolios are increasingly managed by computers utilizing exotic logarithms without human intervention, and nationwide airplane scheduling and pricing is done automatically and quickly by machines. Surgeries that once required large teams of specialists and long hospital stays are safer and less intrusive, and require little or no hospital confinements with the introduction of new minimally invasive systems made possible with computer-assisted micro-surgeries guided by real-time scopes and scans.

As automated systems improve, even the labor forces in low-wage countries will be expensive by comparison. Companies such as Amazon have led the move to highly automated virtual shopping, complete with massive product choice and easy online payment systems. Many retail chains are closing or downsizing brick-and-mortar facilities to emphasize online transactions, jettisoning thousands of service employees as a result. Even grocery stores are not immune: The Boston Consulting Group predicts that the online global grocery market will grow from $36 billion in 2013 to more than $100 billion by 2018.

With excessive supply, employees have little bargaining power with employers as evidenced by meager wage increases in recent years. Technology will accelerate and accentuate the inability of humans, except for a small a minority of highly educated, specialty trained professionals, to obtain real income increases.

Even if, as some predict, manufacturing returns to the U.S. because businesses will seek to minimize their excessive logistical costs, the vast majority of new manufacturing jobs will be paid a wage closer to the prevailing service sector level. As a consequence, workers will have less discretionary income and less ability to drive GDP upward. The disparity between the world’s haves and have-nots will widen at an ever-increasing rate as prices fall, profits are squeezed to the minimum, and economies across the world slow. Social welfare programs will be under pressure even as countries’ financial capability to support such programs vanish.

Social Upheaval?

If everyone has unlimited access to material goods, energy, and health, what will distinguish the powerful from the powerless? The bosses from the workers? Historically, power and influence have been more the result of wealth and birth than possessing extraordinary intelligence or personal achievement. Even the theory of evolution is based upon maximizing and protecting an organism’s share of the available resources. Can we adapt to an economy of abundance, not scarcity?

As noted by one of the more optimistic viewers of the future, Lifeboat Foundation Scientific Advisory Board member Steve Burgess, “Over hundreds of years, we have developed the skills of how to allocate things in short supply. For widespread abundance, we have no experience, no projections, and no economic calculations. Abundance, paradoxically, could be highly disruptive.”

Final Word

In 2006, Alvin Toffler – author of the 1970 bestseller “Future Shock” – and his wife Heidi wrote “Revolutionary Wealth,” predicting that humans are on the verge of a post-scarcity world that will slash poverty and “unlock countless opportunities and new life trajectories.” Some would say that most Americans no longer are driven to feel needs, but wants. Theologians have similarly warned that material goods and wealth (the capacity to buy material goods) are false idols and cannot bring happiness or satisfaction.

Philosophers have advocated that minimal possessions is the real source of freedom. If nanotechnology – the scientists’ Philosopher’s Stone – fulfills the dreams of its advocates, such thinking will be truly tested in a world where everybody can have as much of anything that they want.

What do you think? Will great advances in technology provide the benefits its proponents expect?

Michael Lewis
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike's articles on personal investments, business management, and the economy are available on several online publications. He's a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas - including The Storm.

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