Citing an Oxford University study that predicted 67% of US jobs will be lost to computers – with job loss numbers climbing to 69% in India and 77% in China – the swarm of smart technology sweeping the job market doesn’t outwardly paint a bright picture, noted Joe Davis, Vanguard’s global chief economist. “Who will be left to buy ETFs?” he questioned at the Morningstar ETF Conference. “Wealthy machines?”
But the computerized future isn’t that bleak, he said, pointing to the one trend that he said will shape human history more than any other. There are certain methods of thinking and uniquely human tasks that a computer will never eliminate. Recognizing how “jobs” and “tasks” will change in the future, along with rapid human adoption at the quickest technological evolution point in history, will be key to success, he said.
Morningstar ETF Conference Participants say humans that succeed in the future will adapt to technology quickly
On the day Congress engaged in a rare show of bipartisanship to approve the “Self Drive Act,” which paves the way for quicker adoption of self-driving cars – which could eliminate up to 5 million jobs -- Davis took the stage Wednesday in Chicago at the Morningstar ETF Conference to discuss a historic transformation.
He thinks the global trend of how technology integrates with the job market will be more meaningful to markets than any central bank monetary policy or demographic factors such as an aging or population growth. The intersection of intelligent computer technology colliding with human jobs will transform the very meaning of employment.
This oncoming train might actually be a light at the end of the tunnel, however. This could be true at least for those in the workforce who can quickly adapt to change, which will occur at an even faster pace. The key is to embrace job tasks that are uniquely human while recognizing that routine or predictable tasks are those most likely to be automated.
Morningstar ETF Conference - Embrace tasks that are uniquely human
Jobs, which involve multiple tasks, don’t get automated away, Davis noted. Tasks, particularly repetitive ones, are those that will eventually be replaced but they will complement humans, not necessarily replace them.
Davis breaks down tasks into three categories: Basic tasks primarily dominated in the pre-industrial era and include things such as harvesting, digging and moving objects. With the advent of the industrial revolution, repetitive tasks, such as scheduling, monitoring, and processing information began to dominate. In the wake of the technological revolution, advanced tasks that are “uniquely human” are emphasized. This includes the ability to think creatively, manage relationships, strategize and persuade.
Davis thinks these uniquely human tasks are increasingly going to be emphasized.
In the 1900s he estimates that only 10% of tasks were uniquely human. By the year 2000, that total rose to near 30% as technology took away the repetitive and mundane. In 2015, that number is closer to 50% and in the future 80% of the tasks– both white and blue collar – will only focus on what is uniquely human.
This will help answer some of the odd paradoxes that are looming over the economy.
Economists and market observers alike are perplexed that low inflation co-exists with full employment; low growth co-exists with high stock valuations; low volatility co-exists during a period of record uncertainty.
Davis says technology is behind all these perplexing market issues.
In the future, he says there will be significant automation but more demand for uniquely human skills. Labor shortages will occur with low inflation because wage growth will be offset by technology lowering costs overall, while low inflation will occur amid higher real interest rates.
In short, throw out traditional economics books. Technology is setting up to turn the world upside down.