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New Competition for White-Collar Professionals: Supercomputers

The IBM supercomputer known as “Watson” is best known for its victory on Jeopardy, but its creators have much bigger plans for it: Citigroup has just announced that it has hired the computer, in what the Wall Street Journal refers to as “the beginning of the end of human employment at banks.”

Watson is already on the job in the health care industry. According to Bloomberg, WellPoint Inc. and Seton Health Family are already finding a use for its skills at “understanding and processing natural language, consulting vast volumes of unstructured information, and accurately answering questions with humanlike cognition.” IBM thinks finance is a good fit for these skills as well. The company is

confident that with a little training, the quiz-show star that can read and understand 200 million pages in three seconds can make money for IBM by helping financial firms identify risks, rewards and customer wants mere human experts may overlook.

This is obviously big news in the tech world, but there are broad social implications as well. With the rise (and fall) of the “Occupy” movement last year, income inequality has emerged as one of the hottest new topics of the left-wing chattering classes. Yet for all the discussion, the political conversation has been largely backward looking. In the last generation white collar employees and people with college educations saw rising wages while blue collar and unskilled occupations lost ground. In large part, this was because automation and global competition primarily affected demand for low skilled blue collar work and manufacturing jobs, leaving their white-collar counterparts relatively untouched.

Systems like Watson threaten to change all that. The next wave may even hit white collar occupations with the same mix of outsourcing and automation that has pushed blue-collar wages downward. Citigroup’s hire is likely to be only the tip of the iceberg.

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  • Anthony

    IT has been a major watershed in American history (both economic and cultural). The turn of the 21st century has seen transformation from one way of life (industrialization) to another (yet developing). WRM, therein lies aspects of your “broad social implications” reference. The dynamics of social capital are being rearranged…

  • J

    The changes in manufacturing seem to have eliminated jobs involved in providing goods so it looks like any new socio-economic system that comes about is going to rely on jobs in new services. Only problem is that this Watson news seems to show that list of things computers can’t do is shrinking faster than the list of new things for humans to do.

    So if we don’t don’t work producing goods (blue collar) and we don’t work providing professional services (white collar) what do we do for work? Just sell each other burgers, provide maintenance (plumbing, electrical, etc.), and flood the internet with .99 cent apps?

  • John Barker

    I have an idea for a new era job. I am a subscriber to a music website, Spotify, which offers nearly every piece of classical music ever recorded, plus jazz, country and pop. I need help in navigating through these riches. I wish lessons on the music of Bach were coordinated with the offerings on the website. I would pay for this service if it were done well. I imagine there are probably hundreds of music teachers who could do the job. The wonders of the arts and humanities are not widely appreciated in our world. I think that abundant opportunities exist for those teachers who can show us the way to a richer life.

  • Jacksonian Libertarian

    We all know that Blue Collar workers were sacrificed over the last 40+ years in order to create the American Global Trading System. The US accepted a price disadvantage from the currency manipulations of our foreign trading partners, and that competition fell most heavily on American Labor, by sending the most mobile labor intensive jobs to our trading partners. At the same time millions of illegal immigrants have competed for the less mobile labor jobs that remained, and so Blue Collar wages have stagnated, while White Collar wages have forged ahead.

    No doubt many Luddite types are looking at computers as competition for jobs, just as the original Luddite’s saw jobs in the textile industry in England being lost to machines, back in the day. We look at the present unemployment and forget that despite the competition from foreigners, illegal immigrants, and computerization, the unemployment rate up until recently has been 4-5% (full employment) over the last 40+ years. What has recently changed has been Government Monopoly Borrowing, which is now sucking well over a $1 Trillion dollars a year from the operating capital of the economy, money that would have been loaned to businesses and consumers to create jobs.

    It isn’t the competition from machines or foreigners or illegals that has killed jobs recently, it’s competition for capital from the Government Monopoly that is killing jobs. If you are looking for what is responsible for our present economic problems, you need look no further than the massive Government borrowing that began with the take over of the US House and Senate by the Democrats in 2007. With their first budget they immediately boosted Government borrowing over even that of the aftermath of 9/11. By the end of 2008 the effects on the economy from the lost operating capital were clear from the economic crisis that began then.

  • WigWag

    If Watson can be programmed to lie, cheat, take unreasonable risks, be greedy and to violate securities law then we want even need bank CEOs anymore. They can be replaced by Watson!

  • http://www.smallbusinessrev.com Marty

    Nitpicky grammar point: “The IBM supercomputer known as ‘Watson’ is best known for its victory on Jeopardy, but it’s creators have much bigger plans for it.” Should be “its”, not “it’s.” Thanks.

  • jbay

    And how is answering a question different then arguing a court case, filing court documents, learning how to move ones apparatus from one point to another to pump your gas?

    Ultimately, everything can be automated. Eventually a viable power source will be found and humanoids from Honda and Toyota “already existing” will be married with blue-tooth links to siri and watson servers.

    The only question left is what then. We’re moving from the moment of hunter gatherer to farming. The battle between Cain and Abel all over again?

  • http://www.adamlang.com Adam Lang

    Society didn’t collapse when the sewing machine industrialized tailors.

  • bob sykes

    Computers have been displacing white collar jobs for 50 years. Over 30 years ago I watched white collar employment at a small engineering company plummet. The early IBM/DOS computers eliminate the bookkeepers and most of the secretaries, and a minicomputer running a an early version of the McDonnell-Douglas CAD program trashed the drafting room and many entry engineering positions. Nowadays, a site survey that used to require a four-man crew is done by one person. And the data is uploaded from the field instruments to computers that prepare the maps.

    Right now, engineering companies transfer work files by internet from country to country following the sun. A design that used to be done by a few people in a single room, taking days to weeks, is now done virtually over night by people who will never see each other.

    And then there is the financial community. Almost all trades on Wall Street are done by machine. Vast armies of financial employees are gone.

    Doctors and lawyers will be next as computer interpretation of symptoms and texts improves.

    Even today, a college degree does not guarantee a good job, especially outside of STEM. Eventually even most STEM jobs will disappear.

  • Kris

    J@2: So if we don’t don’t work producing goods (blue collar) and we don’t work providing professional services (white collar) what do we do for work? Just sell each other burgers, provide maintenance (plumbing, electrical, etc.), and flood the internet with .99 cent apps?

    Today, I’d still rather do a bunch of white collar jobs than flip burgers, but if in the future, I can flip burgers for 10 hours a week and enjoy a standard of living higher than that of yesteryear’s white-collars, while spending the rest of my time trying to write the Great American Novel, sign me up.

    (Yes, the GAN will include rambling sentences.)

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