Robots Taking Over Corporate Finance Jobs

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Developing Countries May Need Their Own Strategies to Cope With Job-Taking Robots

By Jamie Condliffe

    July 9, 2020

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If it’s true that robots are coming for our jobs, developing countries could have a much tougher time coping with the shock.

A new study by the economists Lukas Schlogl and Andy Sumner of King’s College London, written for the Washington think tank Center for Global Development, suggests that there is still a need to consider how developing countries will cope with the rise of automation. Most strategies to help workers displaced by robots, some of which look promising, have so far been devised for developed nations and may not translate to the developing world, they argue.

Much research has gone into investigating what kinds of work might be automatable, and predicting when machines will take over tasks performed by humans. Forecasts vary greatly, but there is a consensus that routine tasks that don’t require emotional intelligence, complex human reasoning, or creativity will gradually be filled by robots and artificial intelligence. Reports by the McKinsey Global Institute and the World Bank both suggest that agricultural and industrial sectors have higher potential for automation than service sector jobs, which typically require creative thinking or face-to-face interaction.

That poses particular concern for developing countries, where there are typically larger pools of unskilled labor working in agriculture or simple manufacturing roles.

In the developed world, much of the discussion about how to address the rise of automation has focused on 1) how to constrain it and 2) how to cope with the fallout.

Governments could constrain automation through policy measures such as disincentivization — by, say, taxing the use of robots — or reducing the cost of human labor through tax breaks or cutting minimum wages.

The problem is that disincentivizing automation could just push it into other nations. Developing countries are likely to feel unable to implement those kinds of constraints, for fear of companies or even entire sectors relocating to regions where the use of robots isn’t penalized.

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Mr. Schlogl told DealBook the impact of automation could be felt acutely by sectors that are labor-intensive in developing countries, irrespective of where robots are put to use. Cheap goods can be built by machines in one location and distributed worldwide; a single country could mechanize agriculture and flood a subcontinent with affordable produce.

As for cutting labor costs, it’s unclear exactly how much lower wages can get in many developing countries before they become unethical.

The second way for governments to cope with the disruption caused by automation is to implement strategies that deal with the effects. That includes retraining workers to give them skills required for future jobs, or providing citizens with a basic income to make up for stagnant wages or job losses.

Retraining would be hard to implement in developing nations, argue Mr. Schlogl and Mr. Sumner, because they typically have limited education sectors in place through which to deliver it. And a universal basic income, they argue, would be hard to finance in developing countries, as it assumes the existence of a highly productive services sector from which to siphon money, which is often missing in such economies.

There are some potential routes forward. One idea suggested by Mr. Schlogl and Mr. Sumner is a so-called global universal basic income — administered internationally, and paid for in developing countries via aid. This plan, says Mr. Schlogl, “has the advantage of being only politically impossible.”

Another might be for developing countries to build out labor-intensive sectors that look set to be resistant to automation over the coming decades — such as social care, education, health care, tourism or infrastructure construction. But this is a risky approach, requiring large upfront investment without a guarantee of protection from automation in the long-term.

That makes the pair’s ultimate conclusion — that “we need to ask different policy and research questions” about how automation will affect the developing world — seem justifiable.

Robots Taking Over Corporate Finance Jobs

I am worried bros. These robots are gettinf smarter and smarter. They cannot take my teaching job can they?

I am seriously worried. They never get tired. They can teach 24/7 and never need a lunch break or need to sleep!

IBM just built a robot that can do Kruggles’ job.

3 Ways Robots Affect the Economy

Robots are increasingly being used in every industry and are here to stay, and robotics usage has both positive and negative impacts on business and employees. The following are a variety of ways that robots affect the economy.

Key Takeaways

  • Robots are taking your jobs!
  • They have been encroaching in manufacturing work for decades and now making literal inroads into tasks like driving, logistics, and inventory management.
  • While there may be a negative effect on some labor segments, robots and automation increase productivity, lower production costs, and can create new jobs in the tech sector.

The Rise of the Machines

Technology has played a role in making work more efficient for thousands of years, from simple farming tools to current-day assembly-line robots in factories. Robots are becoming present in more and more situations in business. They work right alongside human workers or completely replace them. For example, Amazon.com Inc. (NASDAQ: AMZN) uses a variety of robots in its warehouses to stock inventory, and retrieve and package items. Tesla Motors Inc. (NASDAQ: TSLA) has fully robotic and automated assembly lines for its electric cars and batteries. Robots are even being used in therapy sessions for children. While it is certainly true that robots are replacing jobs and are a significant threat to low-skilled workers and somewhat of a threat to middle-skilled workers, there are many positive effects that robots have on the economy.

Productivity Growth

Higher living standards can come about through higher wages, lower pricing of goods and services, and an overall greater variety of products and services. Labor productivity growth, as measured as output per hour, is what leads these things to occur. Growth results from one or a mixture of three things: increases in the quality of labor, increases in capital and total factory productivity (TFP), also known as multi-factor productivity.

Increases in the quality of labor come from more and better education and training of employees. Capital drives productivity growth via investments in machines, computers, robotics and other items that produce output. TFP, often cited as the most important source of productivity growth, comes from the synergies of labor and capital working together as efficiently as possible. As an example, keeping the education and productivity of the workforce constant, if the machines they use increase in productivity, the TFP still rises. Robots are unquestionably making the “machine” aspect of production facilities more efficient. Even if the human component of factories remains constant, increased efficiencies from robotics inevitably leads to more productivity growth.

Gross Domestic Product Growth

Not surprisingly, with increased productivity comes an increase in gross domestic product (GDP). In March 2020, a paper by Georg Graetz of Uppsala University and Guy Michaels of the London School of Economics titled “Robots at Work” studied the effects of robots in the economy. They looked at the United States and 16 other countries, and analyzed a variety of data for a 15-year period ending in 2007. Graetz and Michaels found that, on average, across the 17 countries, the increasing use of industrial robots over the time period raised the annual growth of GDP by 0.37%. They compared this substantial growth to the boosts in productivity that occurred at the turn of the 20th century from steam technology.

Job Creation

Many people fail to realize that robots are actually creating new, high-paying jobs that require skilled workers. While it is true that robots are replacing low-skilled workers and automating the tasks that they perform, robots and automation are requiring jobs that focus workers on higher-value work. For example, in manufacturing, robots can perform menial tasks such as raw materials sorting, transporting and stocking, while higher-skilled roles such as quality-related tasks, which humans are more suitable for, can be completed by higher-skilled workers.

While it is true that robots and automation are taking away entire categories of jobs across a multitude of industries, it has never been a better time for workers to get higher-skilled, higher-paying jobs as long as they become skilled and educated enough themselves to fill those roles.

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