I actually feel a little sorry for the Royal Bank of Canada. The villain of the week has been portrayed as a callous rule-bender throwing hard-working Canadians out of work to maximize its obscene profits. The online outrage boiled over. The CEO grovelled. The government pledged to look into the whole thing and clamp down on companies abusing the temporary foreign worker program.
In fact, the bank is behaving exactly like every other business. They’re all in search of better, cheaper and more productive ways of doing things. Unfortunately, these better, cheaper ways may not necessarily include maintaining you in your current job for the rest of your working life. We, too, could wind up training our replacements.
But don’t blame greedy capitalists for your distress. Blame technology. We’re going through a technological revolution so disruptive that we’re only beginning to feel its impact. Advances in technology are the reason why RBC can outsource work to Indian software engineers who are paid 10 cents on the dollar. In the next stage of the revolution – coming very soon – the bank won’t need people to do this work at all.
The revolution started lower down the value chain, wiping out millions of middle-class jobs that real people used to do. Bank tellers, data-entry clerks, airline ticketing processors, travel agents, office assistants and meter readers bit the dust. Entire occupations were virtually obliterated. Not all of these people were laid off; they simply weren’t replaced. Today, retail workers are being let go by the thousands because more and more of us are shopping on the Internet. They won’t be replaced, either.
Andrew McAfee, a research scientist at MIT who specializes in technology’s impact on business, says the pace of innovation has sped up so much that our skills and institutions simply can’t keep up. A lot of people have been left behind. Computers contribute enormous wealth and productivity to the economy, but not much employment, he agreed in an interview with the CBS program 60 Minutes. In his blog, he points out that Apple, Amazon, Facebook and Google have a combined market capitalization of more than $900-billion, yet employ fewer than 200,000 people. That’s less than the number of new jobs the U.S. must create every two months just to hold the unemployment rate steady.
Technology-related job losses have depressed median wages and kept job-creation rates miserably low. But it’s not just lower-level jobs that have disappeared. What’s astonishing is how rapidly the job displacement is moving up the value chain. For example, new accounting systems that can perform higher-level tasks are putting general accountants out of work. “What would get you into a CA firm 10 years ago won’t get you an interview today,” one accounting professor told me. Radiologists – among the highest-paid professionals in medicine – are facing brutal competition from outsourcing, because anyone can read a diagnostic scan. Before long, even those people could be replaced by computers.
Software legal programs (known as e-discovery) are wiping out law clerks who used to sift through tonnes of documents in search of information used in litigation. These programs are far cheaper, faster and more accurate than mere mortals. A version of Watson, the computer program that can beat every living being at Jeopardy!, is being developed for medical diagnostics. The giant job-search industry, which was built on recruiting mid-level professionals, is being hammered by online sites such as LinkedIn that allow companies to find workers faster and cheaper on their own.
Underlying all these changes is the exponential advance of artificial intelligence. Computer power is getting faster and cheaper all the time. It’s now powerful enough to operate a self-driving car. I don’t want to be an alarmist, but artificial intelligence software can now be used to grade university-level essays (not just multiple-choice tests). Computer writing engines can produce a decent sports or business story in less time than it takes a J-school graduate to fetch a cup of coffee. They can even be instructed to add tone – from straight up and dignified to irreverent and snarky. No doubt they’ll eventually master opinion-writing. Before long, I could be replaced by an algorithm.
Technological revolutions are very good for the human race, in the long run. The steam revolution liberated people from rural serfdom and abject poverty. But, in the short run, a lot of people suffer. As Prof. McAfee writes in his book Race Against the Machine (co-authored with Erik Brynjolfsson), “There is no economic law that says that everyone, or even most people, automatically benefit from technological progress.” For the record, he’s an optimist. He thinks the information revolution will create far more wealth and opportunity than it destroys – eventually.
Meantime, we’re in for a lot more shocks. The world is changing faster than we want, but nobody has the power to slow things down. None of us will be left untouched. And that giant sucking sound you hear may be your livelihood.
But if you’re looking for villains, fancy algorithms make for lousy targets. Bank presidents and neglectful governments are much more satisfactory.