Monday 4 December 2017

Middle of the Road

I find myself stuck finding a position regarding the government’s introduction of T-Levels1 and the Chancellor’s recent promise of more maths education.2 There are a few things to acknowledge. The first is that we need skilled workers and that young people should have the opportunity to gain skills and pursue their ambitions. The second is, as a lover of mathematics myself, I do not object to a more comprehensive push for maths education.

The reason I find myself stuck is I must ask the question of whether these initiatives are really building an effective future labour force? Goos and Manning (2007) paper ‘Lovely and Lousy Jobs,’3 does a great job of explaining this issue.

The long-held belief is that automation (which doesn’t necessarily mean computers - automation has been happening for years, as we will come to see - but often does mean computers) would first reduce the demand for low-skilled work, as these were (apparently) simple jobs. The result of this automation would be an up-skilling of the workforce, which would be wonderful. This is the sentiment behind the government’s current strategy (which, I reiterate, I don’t condemn), and they have good reason to think this way.

Automation is a very popular topic in business schools, and whenever I am discussing it with my colleagues I raise the point of Adam Smith. Smith spends a respectable portion of The Wealth of Nations discussing the shift from an agricultural economy to an industrial economy.4 I proclaim, in said conversations, that all society need do is embrace change and implement the necessary skill-shift to accommodate the new dynamic, in the same vein as Smith, and any automation fears would be set aside (I am simplifying here). In this sense, the government’s policy seems to come from a sensible place (Smith I mean, not me).

Yet Goos and Manning argue that rather than targeting low-skill work, automotive processes target routine work, irrespective of skill requirement. And if we think about it, this makes a lot of sense. Computers can do extremely complicated and time-consuming mathematics almost immediately. In terms of raw cognitive power, computers have humans beat every time. In terms of abstract cognitive power, less so.

A good example of this is accountancy. Services such as Quick Books threaten many of the small accountancy firms.5 This is because of automation, yet many people would not classify accountancy as a low-skill profession. However, it is one that can be automated with a certain level of ease, and as such it has become susceptible to our digital overlords.

Whilst the consequence of low-skilled automation should be the up-skilling of the workforce, the consequence of routine automation is that only those roles that are physically and cognitively difficult for computers to perform will see growth in human labour demand. This is the infamous polarisation of work and the hollowing out of the middle class, where low-skilled but physically demanding jobs such as a cleaning see growth, high-skilled and cognitively challenging work such as a CEO remain in demand, and middling jobs fall away.6

Returning to the government’s policies, this is where my issue lies. The Chancellor recently stated he would like the British people to have good jobs, which is a noble but mathematically difficult ambition - we can’t all be CEOs. Similarly, mathematical knowledge will always be useful, but it will not be a distinguishing factor for many top jobs in a world where we all have impossibly powerful calculators in our pockets. Technical skills perhaps offer a ray of hope - for the time being trades such as electrician look pretty safe. But again, there is finite demand for all these things.

We already see the problem of over-qualified and under-demanded people in this country, given the number of graduates taking low-paid work.7 My fear is that a promise that would have worked previously is now just offering false hope.

I say this as someone who has optimistically espoused the wisdom of Adam Smith. The intention of the government is to train young people in the skills needed for the digital economy, much like Smith advocated for the industrial economy. Yet that wisdom needs to be dragged into the 21st century. To answer this, I refer to The Second Machine Age by Brynjolfssen and McAfee.8

In this book, the authors argue that computers and humans are greater together than as the sum of their parts. Where computers can process data in a way humans never could, humans can apply the data and derive complex social links that a computer would be blind to. Behind every good algorithm is an insightful observation.

I have always been a supporter of a social contract for the digital age. Automation and human work is part of that contract. The solution in terms of up-skilling and re-skilling is to be more radical, and to embrace what we do well which computers do not. T-Levels have merit, but alone they do not tackle the growing polarisation of work. As part of a long-term strategy, the solution is complex, though it almost certainly involves investment in technology, robust institutions to ease the transition in work and a willingness to embrace new ideas about education and skills-training. Our role in work is changing, and so must we.

References



3 Goos, M, Manning, A (2007) ‘Lovely and Lousy Jobs’ The Review of Economics and Statistics, 89(1), pp. 118-133

4 Smith, A (2012, 1776) ‘The Wealth of Nations’ Wordsworth Editions Limited, St. Ives


6 Autor, DH, Levy, F, Murname, RJ (2003) ‘The Skill Content of Recent Technological Change: An Empirical Exploration’ The Quarterly Journal of Economics, 118(4), pp. 1279-1333



8 McAfee, A, Brynjolfssen, E (2014) ‘The Second Machine Age: Work, Progress and Prosperity in a time of Brilliant Technologies’ Norton & Company Ltd., London

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