Robots building robots to build robots

Ted Folkert

June 3, 2015

My friend Burt Steiger told me that he went to Bank of America the other day and was shocked when he saw that all of the tellers except one had been replaced with automatic teller machines. ATMs have been available outside many banks and in many other locations for years, but this is the first I had heard of them replacing tellers in the bank lobby where we all feel like we can get personal service. But, I guess we shouldn’t be surprised, it seems to be commonplace everywhere else we go for routine services. The savings by eliminating employees is too good for business owners to pass up as long as the business can prosper without them. And many of them are incurred in order to make the business prosper better. And, as some of us entrepreneurs understand, if you don’t compete, you don’t survive in business. If your industry pays the minimum wage, you either follow suit or you lose out to your competitors.

Some of us are old enough to remember when automatic car washes replaced many hand car washes and when self-service gas stations replaced gas service stations which actually pumped your gas, cleaned your windshield, checked your oil level and your tire pressure – all for a couple of dollars purchase of gasoline. Now the food markets, pharmaceutical stores, home repair stores and many others are converting some of their checkout lanes to self-service.

These changes didn’t just happen. I remember in the 1980s having automatic, numerically-controlled machines in the metal fabrication business that replaced fulltime machine operators. They not only replaced them, they were more reliable, more efficient, and produced precision parts of a higher quality. This doesn’t mean the employees were not good, they just couldn’t provide the precision repetitive function that a machine could accomplish.

Credit cards now open doors, close sales, eliminate the need for cash, and expand credit enormously. The real question is, where does this end? I read a book recently by Jaron Lanier, “Who Owns the Future”. Lanier is a bright computer scientist who does special projects for the likes of Microsoft. He created the term “virtual reality”. In his book he talks about a future of home robots that will soon make home robots that make dresses from patterns online. I suppose after that we will have robots that make robots that make robots. So, will the only jobs left be for software engineers who design programs for machines to make things that people used to make? Will we eventually be down to one person or one software program that directs the activities of computers that plan and control everything?

Jaren Lanier also mentioned Kodak, the company that employed 140,000 people and was worth $28 billion, and now they are bankrupt. The new face in digital photography is Instagram, who sold to Facebook for a billion dollars in 2012 and had 13 employees. The rise in digital networking is enriching a relative few while enjoying the value from millions of users who contribute enormously to the value without being paid for it.

I just read an article about a company that operates 500 truck stops nationwide. They had 80 people working a total of 3,200 hours per week paying bills for the goods they buy regularly. They now have it done automatically online with 10 people working a total of 400 hours weekly. Robots have taken over many financial functions for corporate offices. Since 2004 these jobs have been reduced by 40%. That is correct – 40%. For every 100 people who used to do that kind of work, 60 of them no longer are employed in those jobs.

Dean Baker, Center for Economic and Policy Research, doesn’t think that robots are taking our jobs. He says, if they were we should have many more applications for hi-tech jobs than unskilled positions, which is not the case, and that if technology were rapidly displacing workers then productivity growth should be very high, however, for the last decade it has been limping along at 1% or so. He also believes that if technology were causing inequality, that there should be more demand for high-skilled jobs than less-skilled, which is not the case.

So, I guess the story doesn’t end there. We don’t know what the future may bring in the job market, we just know it is not going to be the same. Change is inevitable.

So, Burt, be nice to the robot that greets you in the bank lobby. That may be as close as we get to personal service in the near future.

Think about!