Unemployment 2.0: New Problems Require Different Solutions


During the Global Financial Crisis a few years ago, the world was overwhelmed with layoffs and unemployment. Yet, if the experts are right, we can expect far higher unemployment in the near future as robots and artificial intelligence systems arrive in factories, corporations, and retail establishments. These new technologies don’t just help us to do our work, they directly replace workers.    

The world’s response to the last wave of unemployment was, unimpressive, to say the least. Have we learned anything since then? If robotic unemployment is inevitable, shouldn’t we have a plan ready? The consensus view on the Robot Revolution is that we will lose half or more of our jobs, in a very short period of time. Dealing with unprecedented unemployment will require radical thinking. Could it be that the solutions we need already exist?

They just might! Valerian Texteria is a regular reader who raised some issues about unemployment. We struck up a conversation about globalization, robots, and work that led to an interview on the subject. Valerian makes some interesting points that stimulate new thinking about unemployment and the policies needed to control it. Here is my interview with  Mr. Texteria.


  • Mr. Texeira, welcome to my blog! Could you tell our readers a little bit about yourself? 

I was born in 1951 in India, just after Independence from Great Britain, and lived here all of my life. My father was an industrial worker, a religious man, but an active union member with his own social justice and equality ideals. That’s a legacy I carried on through my life. We were poor, my mother was a housewife, who tried hard to make both ends meet. I was the eldest of 3 children, with a strict control and punishments…. not a pleasant childhood experience. At the age of 16, with just a basic 10th standard education, I was admitted to an industrial training apprenticeship program. I became something of a rebel. From the age of 19 to 28 I worked in quite a few workshops as “Turner”, making and fitting together metal components. This is when I became an avid reader of detective stories and novels. Dostoyevsky’s “Crime and Punishment was one important book (among many) that deeply affected me.

At the age of 28, I left my job due to my labor union activities and was soon recruited by an NGO as a labor activist. I was introduced to Communist literature, and soon became a Marxist, a rationalist. My prolific reading combined with scientific curiosity, making me more interested in Marxist economics than political literature. At that time I led a small group of young workers within a larger Marxist circle and began publishing a small workers’ paper (in Kannada, my state language) called the “Laborer”. This started a path of deep thinking and analysis of the concept of “labor exploitation” on the working class, led me to write a book on my theory of human labor.

  • Could you tell our readers more about your book? Why did you write it? 

I published:  “An ALTERNATIVE to Marxian Scientific Socialism – The Theory Reduction in Working Hours – A Demand 6 Hour Working Day”, in 1981. My objective was to present an alternative to Marxian Socialism or Communism. A new theory was needed because Marxism ignores fundamental facets of labor exploitation, which wreak havoc in lives of the working class including the unemployed and the self-employed. Most importantly, Marxism completely missed the development of the technology, resulting into the Artificial Intelligent (AI) ROBOTS, that could replace most human labor.

As technology advances, human labor will become REDUNDANT. With this historical perspective, I saw  the historical destiny of  “Working Class” to gradually reduce working hours. When the working hours finally reduced to zero, there is no need for workers and no wages. That is why my theory also assumes that citizens of the world must receive an Adequate Universal Basic Income (AUBI) in order to lead a healthy, comfortable, secure life. The historic compulsion to perform work, to obtain food and shelter, would end. My revised name for this theory is “Zero Work Theory” (ZWT).

  • Your Zero Work Theory Focuses on the abolition of paid (wage) labor. Why is that important, and why is that different from socialism?

According to my theory, “The basic relationship of workers to their LABOR”, is due to the COMPULSION” of obtaining the “means of subsistence”, in the form of food, shelter, clothing, health, education, comforts etc. Humans MUST work, it is not a choice but a necessity. Originally, nature imposed the need to work, on humans in general. Basically, it allows some human beings to exploit (oppress, subjugate etc.) other human beings to work for them so retaining a portion of the products or “value” of their work.

The exploitation of labor is the root-cause of most social injustice: poverty, crime, etc. Therefore, as productivity rises the NEED for labor fades away. Society as a whole should engage in a step-by-step reduction in work hours, leading to a Zero Work Day.   Real freedom for the human race means liberation from our historical compulsion to do labor. This is the last remaining form of historical human bondage or SLAVERY. A society without this compulsion is a truly democratic, humanitarian and equitable socio-economic system.

  • When you say Labor “Compulsion”, what do you mean?  In a free labor market, aren’t we all free to make our own choices?

The large majority (laboring class) in the society compelled to work, in order to obtain their food, clothing, shelter, health, education, comforts. It is commonly called as wages, salary, remuneration or income. It is true that the workers are free to do labor but they are not free to, not do labor. Otherwise, they will have their income cut. Without the basic income, NO decent food, clothing, shelter, health, education and other comforts. They will be forced to undergo immense suffering, homelessness, left to die or reduced to begging.

Is this a free choice? What about individuals driven to the most degrading labor, such as prostitution? Yet, these “choices” have existed since the dawn of the human species. Prostitution and begging are “real”, but we could eliminate them in a single stroke, with an Adequate UNCONDITIONAL Basic Income Guaranty.

  • Your core theory for ZWT is called “Wage-Labor Exploitation”. How is this different from Marxism, which talks about Working Class Exploitation?

According to the ZWT, throughout human history, up to the present day, humankind has undergone four basic forms of labor exploitation. 1. Subsistence Sustenance Exploitation 2. Relative Labor Exploitation 3. Productive Labor Exploitation  4. Absolute Labor Exploitation (the book explains, each in detail). These forms  of exploitation are,  primarily responsible for social injustice, inequality, poverty, repression in both the capitalist and socialist systems in the world today. The concept of “Labor Exploitation” in Zero Work Theory is fundamentally different. from Marxian socialist concept of ruling (capitalist) class exploitation of working class.

Marxism claims that LABOR-EXPLOITATION exists mainly due to the social “class” system, that results in the constant “class struggle” between the minority  “capitalist class” and the majority working class. It classifies the  human history to date into three systems: 1.Slavery, 2.Feudalism, 3.Capitalism. In each system, the “property owning” minority class (the wealthy) dwells mainly on labor exploitation of the majority class (the poor). Marxism claims that the private ownership of property is the fundamental reason the working class is exploited, and creates social evils like injustice, inequality, poverty, repression etc. Further, Socialism proclaims that a 4th system (something new, but still a part of socialism / communism) will abolish private ownership (private property), eliminating labor exploitation.

Marxist fundamentalists claim that human society will have social, economic and political equality if it abolishes the “private ownership of means of production”, abolishing labor exploitation, and ushering in a “classless” communist society, have been proven completely wrong. Another Marxist basic assumption, that only human labor creates value and wealth in society has been proven wrong  by artificial intelligence and robotic automation, which will make human labor redundant. One of Marx’s most famous quotes is, “From each according to his ability, to each according to his needs.” This means that you need to labor according to your capacity, and then society will provide everyone with everything they need. It is like a science fiction movies with intelligent robots and unlimited free power production, yet all of the humans are still working. Doing what?

ZWT agrees with the main Marxist idea that employers exploit the labor of workers in the form of Relative Labor Exploitation. Nevertheless, it thoroughly denounces Marxism for failing to recognize the rest of the labor exploitation. Marxism is not able to address the labor exploitation of the unemployed and self-employed. Moreover, ZWT does not accept that the abolition of “private property” will end Labor Exploitation. Irrespective of whoever runs/manages the means of production (factories, industries, companies, business, corporation etc.) as long as workers are compelled to perform labor to earn their livelihood (means of subsistence, wages, income), labor exploitation will continue. Only reducing working hours reduces labor exploitation. A two-pronged approach can achieve this goal. First, directly reduce working hours. Second (and most importantly), provide a means for people (a significant number of people) to leave the labor market, which requires an adequate Universal Basic Income (UBI).

  • What does your theory say about the new generation of intelligent ROBOTS?

Robots are basically the decedents of the tools used by primitive humans as an extension of their body parts to perform functions that increase the productivity of their labor. We have achieved such a high degree of technological sophistication that robots can (or soon will) REPLACE nearly any function of the human body, including our BRAIN function.

As per the ZWT,  in our early historical development, primitive man-made tools (knives, scrapers, hammers) that replaced or augmented our body functions to improve labor productivity. The second stage was centered around the industrial revolution of the 18th century. Human muscle power was replaced by gigantic steam engines and later electric power. These powered tools and machinery tremendously improved labor productivity. In the second half of the 20th century, we entered the third stage of labor productivity. The silicon microchip revolution assisted workers with calculators, computers, and software driven machines. Today, we can (or are about to) replace human intelligence (human brain power), with the technology we call Artificial Intelligent (AI). Robots can perform jobs that people perform, making most human labor redundant.

New AI machines have been matched with DEEP-LEARNING (algorithms of various types), and web-based cloud sharing, to do things that are beyond human capacity. Every generation of software will become faster and better… superior… to human intelligence. The emerging QUANTUM computers (‘D’ WAVE at its forefront) can bring in a paradigm shift in the field.  At some point, perhaps in the very near future, will completely remove the need for human labor. Industrial, manufacturing blue collared work and most of the white collar, office, service jobs  in the process of being converted from humans to robots. (More details about ZWT are provided at http://bit.ly/2apUuVB ). Therefore, a gradual reduction or even a complete end to working hours (zero work) with the empowering ABI will become a necessity for human society. This is the historical perspective of the Zero Work Theory, in contrast to Marxist Historical Materialism, which I described earlier.

  • How did readers respond to your book?

Except for one or two positive book reviews in the popular Kannada News Papers in 1981 (which still remain popular today), there was not much response. I think my book failed to get the “response” it needed, to become a book that made political changes, because of my situation of that time.

  • Why do you think your book fail to get the response that you wanted? Could you tell our readers more about this? 

Imagine some unknown young guy with no academic background or any credentials, proposing this theory of Zero Work with Basic Income Guaranty in 1981 as an alternative to Marxian Socialism. No one will believe it possible that I would succeed. No sensible publisher at that time would even look at it. It had to be self-published by my Union group. We tried to distribute it to well-known academics, but outside our group no one was interested. With hindsight, I see that I was the wrong person to deliver this message, I was underprivileged and disadvantaged, (a description that still applies). I wanted to achieve an impossible task, exposing a fundamental flaw in Marxism, a philosophy followed by hundreds of millions of people and for a century. No matter what I did, I would never convince socialist/communist leadership (this is the leadership of most organized workers in India) to abandon socialist revolution ideology for my reduction in working hours demand. If no one would listen to me, I had to wait for history to prove which theory was right.

Since 1980, work hours for the working class was not reduced significantly as it should be as per the ZWT. As a consequence, the overall “value of the labor power” has decreased. Technological progress has wiped out a large portion of industrial manufacturing jobs, shifting the large portion of employment into service sector jobs. The working class has weakened to near the collapsing point. On the other hand, the  strength of Capitalist or “ruling” class had grown. Paradoxically, instead of the working class demanding a reduction in working hours, the ruling class has begun to offer a reduction in working hours. Some corporates giant of “Silicon-Valley” have begun to promote UBI, which will allow the laboring class to escape wage labor. This as an early manifestation of the ZWT. Today I am confident that history will prove that ZWT is right. I warned about the rising threat of robot driving unemployment and proposed a scientific solution, the gradual Reduction in the Working Hours (my theory in 1981). Sadly, pundits in the field have not yet recognized or are very reluctant to accept this important historical message of ZWT.

In 1980 the “working class” meant industrial, manufacturing, and factory jobs. As per ZWT, these jobs have dwindled away around the world, even in late developing countries like South Korea. As working class jobs shrink down, countries are examining Universal Basic Income (UBI). Office and professional jobs, which were formerly “ruling class”, have been demoted to the new “working class”, and they are now following the same process of dwindling away. Against the predictions of Marx and all his followers, almost all of the Communist/Socialist countries are gone. All capitalists nations did not become socialist, and no socialist country evolved into a Utopian paradise. The few socialist nations returned to capitalism. Since no socialist theory said, “we will become socialist, then go back to capitalism, then become socialist again, and THEN become a Utopia”, we can safely say that history has spoken. We can forget about traditional socialism.

  • You wrote your book in 1981, in India. The world has changed a great deal since then. Do you feel your theory is still relevant? Does ZWT only apply to India or will it work for the  rest of the world? 

 ZWT is more relevant to the world today than ever before! It applies primarily to industrially developed nations, rather than developing countries like India, but as a nation develops the theory has a greater impact. My writing definitely applies to the United States, the world’s leading industrial superpower as the ZWT model. The majority of economists say that China will soon be the world’s #1 economy. China and a few smaller nations were very late to develop. Much of Africa has still to develop,  and their Industrial base is still growing. ZWT predicts that as China develops, they will follow the same pattern of massive industrial unemployment, followed a few years later by growth and then decline in white-collar work. China will seek relief through some form of UBI, as will India. In the developed world, Sweden is testing UBI, Finland had a vote on UBI (but lost), and in the US there is a lively discussion of the minimum wage, which is a bit different than UBI, but overlaps on the idea of a “basic income”.

I don’t expect to read about economists using my theory by name, but I do see them expressing similar concerns and solutions now that I spoke of back in 1981. Nations need to realize that “Technological Unemployment”, created by the AI deep-learning robots, will make human labor redundant, requiring the implementation of an adequate Universal Basic Income (UBI). Therefore, the need for wage-labor can be completely done away with.

  • Does this Theory Apply just to the Rich, or equally to the Poor Countries? How would it be Applied in India vs. America?

Even though India is still a developing country it will quickly follow the world, particularly the US. The IT and Knowledge Industry in India will be impacted the first. I am not sure to what extent we will see the entry of self-driving vehicles on Indian roads or Wal-Mart robots in our supermarkets in the next 5 to 10 years. However, the most important thing to know is that developing countries like India, seeking a place in today’s globalized world, will be HELPLESS to do anything other than following the technological trends in industrialized nations.

  • If robots take over all work, what happens to today’s jobs? 

Past industrial revolutions created far more jobs than they replaced. The intelligent robot revolution will be different, wiping out all jobs performed by humans today. This is the first time that there is a potential for NO net job creation. These robots are capable performing not just existing jobs, but new jobs that are created by technology changes. Robots are always more efficient and cost less than human alternatives. Every year, the best robot gets better. The best human, the absolute best in the world at doing a job, doesn’t get better but does want to be paid more. Don’t we all expect to get a raise, especially as we become experienced and perform better? Robots get cheaper as they improve. The robot revolution will create new jobs, such as robot service technician. But new jobs can be taken over by robots, just like old jobs were. Some new “jobs” may go directly to robots because they are too difficult or dangerous for humans (retrieving humans from a fire, working inside of a nuclear reactor, medical aid for Ebola patients).

When most human labor becomes redundant, and there are far more people than work, the majority of people will have no employment. However, humans will still fill some jobs, those that robots are not yet ready or not allowed to do. This could be less than 30% of the jobs today. If there are only 30 jobs for 100 workers, no amount of effort or perseverance on the part of workers will result in more than 30% employment. The 70% unemployed can start their own business. A few may have the skills to run a restaurant, make jewelry, write a book (that sells), or even invent something. In America today, 90% of new businesses fail in a good economy. Self-employment and small businesses might add 5% to 10% jobs… at best. For everyone else, the vast majority, we need an adequate Universal Basic Income (UBI).

However, some people will demand a job. They may have critical skills, such as doctors and scientists, that strongly benefit society should be kept employed. Other individuals will outright reject a government stipend. To address these social issues, we need to reduce the number of hours in a typical working week. The reduction in the work week to 30 or fewer hours is probably a good starting place. For every nation, the formula for an UBI and for a reduced work week will vary and may change over time. It is for the people of every nation to DEMOCRATICALLY decide these details.

  • What needs to happen to implement your theory, and when? Who needs to take Action?

My present position is that rapid AI robot automation will cause massive job losses and immense unemployment problems. Public opinion, mass demonstrations, social media etc. will compel Governments to implement “Universal Basic Income” (UBI) or something of that sort, more so in the industrially developed countries. It fundamentally differs from classical poverty/welfare programs. When Governments implement and UBI, it will provide an “escape valve” for people who cannot find a job and do not want to work anymore. My interpretation of the UBI today is that it is an early manifestation of ZWT, a visible sign of society adjusting to the overall Reduction in Working Hours Theory.

  • Earlier you mentioned the UBI. Can you tell us more about how it works and why it is necessary for your Theory?

A Universal Basic Income provides an alternative to a socially destructive level of technological unemployment. When jobs go away, they won’t go away evenly. Robots will quickly replace clerks and truck drivers but replacing heart surgeons will take longer. Tens of millions of American’s do not work, for one reason or another. Without a financial requirement to work, parents would spend more time raising their children or taking care of their elderly parents. That’s what adults want to do, that what their children want, and it’s what THEIR parents want. It is also what governments say are good family values, the values that they want to encourage.

Will implementing UBI be difficult? Yes, tremendously difficult. But what is the alternative? Governments are just beginning to realize the extent of the disruption that robots will cause. Will America outlaw new technology? Can that be done if China and other countries use new technology to dominate the global economy? The global financial collapse showed how difficult it is to deal and “cure” 8-10% unemployment. How will governments deal with robotic unemployment of 50% or more? Will they offer training programs for jobs that do not exist, or are about to be replaced by robots? What is the alternative to a UBI that offers any dignity to the millions who will not be able to re-enter the job market? This is the biggest dislocation ever seen in the labor market; it requires a solution that is equally big. To survive the AI Deep-Learning robot revolution we need the UBI to reduce the total number of workers in the labor force, and then we can share the remaining work through a reduced-hour work week.

The historic progress of science and technology created smart machines… robots and artificial intelligence. Deep learning is a technology that learns how to duplicate human labor functions, and then instruct robots how to use these functions to independently produce goods and services. Little if any human wage-labor will be needed. In the past, asking to be paid without working for the money was considered lazy, or greedy, or dysfunctional. In the age of the robot, instead of compelling everyone to have a job, people who are not willing or capable of performing work should be allowed to withdraw from the job market through the UBI, and therefore reduce unemployment. They can be free to do whatever they like. Millennial might like the UBI the most!

  • Won’t  your UBI proposal be expensive to implement? How much would it cost to implement your theory? 

The costs, the features, and the timetable for implementing the UBI will be different in every nation. Therefore, the experts in every nation need to work out these details and allow their people to approve the proposal. The cost of ZWT has to reflect what is presently spent on government entitlement and welfare programs. The UBI will replace many of these programs and their costs. The UBI will probably cost more than the programs that it will replace. The details of this plan must come from a nation by nation discussion.

While the UBI is not free, any other plan to deals with 50% unemployment, will also have significant costs. A well designed UBI could cost less than any alternative program. The “disruption” from the robot revolution is caused when human jobs are lost to cheaper robots. This replacement process creates additional profits, most of which will go to the wealthiest citizens. It is up to each nation, but higher corporate profits are an opportunity for new tax revenues that can pay for the UBI. That same increase in efficiency simultaneously lowers the cost of goods and services that all citizens purchase. More potential tax revenue plus a lower cost of living will reduce the financial impact of a thoughtful and effective UBI.

Today unemployment is a temporary condition. The economy is good when unemployment is low and struggles when it is high. If you lose your job, you can find another job…  even if you need government paid re-training. But what if robots take over half of the jobs in the world almost overnight, and the robots that took over your old job can learn to take over your new job? Unemployment of this type is no longer the old familiar unemployment that we knew, and that we knew how to deal with. 

We don’t just need new ideas, we need a new framework to deal with new realities. Retraining is a traditional tool to deal with unemployment, but it was designed to help thousands out of a labor force of millions. When tens of millions of workers lose their jobs, and we don’t have a conveniently growing sector to replace those jobs, how effective will retraining be?

The ideas that Mr. Texterian wrote about 35 years ago do look valid today, and his proposed solutions could help us today. If we’re not yet ready to implement radical ideas, are we ready to at least examine ideas like ZWT, that could help address unemployment AND reform entitlement and other poorly performing government programs?  Given the economic shift we are about to experience, it’s time to expand the scope of our solutions. At least that’s my Niccolls worth for today! 



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Trick or Trump…. The November Surprise!


In an election where everything that can happen has happened, it’s hard to say if Trump has finally gone one step too far, or when he took that one step. Three weeks from the election, Trump is down in the polls and it looks a win for Clinton in November. But it’s almost Halloween. Scary orange Trumpkins are everywhere! America’s Haunted House definitely has the ghost of Trump… but what if the ghost NEVER leaves! It is time to ask, “What will the world look like if Trump doesn’t win?” The answer is scarier than you think… ooooOOOoooo!!!

If Trump doesn’t win, that doesn’t mean he’s lost. Certainly, he’s not going to declare defeat. Try, just TRY, to imagine his concession speech to Clinton! Since the very start of his campaign Trump has said that the election is rigged, or will be rigged, or might be rigged, or Eleanor Rigby was the best Beatles song.  The details are less important. What matters is that Trump found this issue. Even when no one else knew that there was rigging. Really. No one… absolutely no one. And best yet, just like Trump ended the birther issue that Trump didn’t start, he will end any question about the Rigging of the Presidential vote. And as all of his followers know, it must be trump that ends the Rigging issue, since no one else thinks it even exists! 

Trump beleives that the Democrats will rig the Vote in Pennsylvania, by voting over and over again. One of Trump’s supporters (Rudy Giuliani), goes even further, tells us that Hilary Clinton will put her Zombie army to work manipulating the vote. Rudy tells us, “Dead people generally vote for Democrats.” Just what sort of promises has Clinton made to the undead to get their help. We may never know… the emails have been deleted!  OOOooooOOOoooo!!!


Trump can also show that members of his own party failed to support him and joined with the Democrats to attack him in the press. Look at the RNC. They have only raised 25% of the funds they raised for Romney. Do you need more evidence of sabotage against Trump? Trump’s campaign staff is about to release a BOMB! After carefully researching the nightly news coverage for the last year, they discovered that America’s most respected news programs… The Daily Show, Saturday Night Live, and Last Week Tonight… have conspired against Trump, literally twisting his statements into… jokes. There are even rumors that Trump has been digitally re-edited so that he is wearing an orange fright wig!

Trump supporters don’t want to lose their leader after the election. With a little encouragement, Trump might be convinced to stay in the limelight, just a little longer, for America’s sake. But he may not be ready to let go of his followers. But… after Republicans properly thank him for his efforts, take retribution against his detractors, and admits to the phantom (phantom?  ooooOOOoooo!!!) campaign against him, I’m sure he will be happy to personally lead the reunification of the Republicans.

Alternatively, Trump could form a third party, or create the Trump network, or just sell products to his tens of millions of loyal followers. Candidate Trump is just a recent product for brand Trump. His brand has sold luxury apartments, steaks, wine, water, and a university. These products have come and gone, and so too will Candidate Trump. In fact, candidate Trump should leave the public stage as quickly as possible. Trump has evolved from making his money by building buildings to being paid to license his brand (and a giant golden “TRUMP” sign) for buildings. After a rough campaign, that “Trump” sign might not add so much value to a new building.

Measured by the polls, the Trump campaign has been mediocre. Measured by mindshare, the Trump marketing machine has been spectacularly successful.  “The Apprentice” made Trump a national brand, but the election made Trump an international icon. Before the campaign, the “guy on the street” might recognize Trump and want to learn how to think like a billionaire (operators are standing by at Trump University). During the campaign, the most powerful leaders of the world spent time deeply reflecting on Trump’s thinking. Germany’s PM wants to know Trump’s plan for Syria. The King of Saudi Arabia knows he needs to understand Trump’s oil policy.  Canada’s top leaders wonder when Trump will nuke Ottawa.

Trump is at his happiest when he is in front of this supporters, being a bit naughty. He loves to play to his followers and they love to see their leader on stage. If the King from Queens cannot be the President, he can certainly be a maker of kings and queens!

With a third of the party behind him, he has the attention of the Republican party for as long as he wants it. Trump can build a third party, settle debts with those who have offended him, or anoint the next generation of leaders. Trump can become the voice of electoral reform! We know that we need it. I can’t think of a single voter who hasn’t told me, “Dear God, we can’t go through this again in 2020!” And I’m sure that all of America agrees that no one knows more about what’s wrong with this election than Trump! 

You thought Halloween was scary! Well, just wait for the post-Halloween season. Win or Lose we can expect  24 x 7 Trumpageddon…. All Trump, all the time!  ooooOOOoooo!!! That’s my Niccolls worth for Halloween, and I’m sticking with it!

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Resistance Was Futile: Welcome To McDonalds Robotic Arches!


Fast food is in the crosshairs, and the industry is very nervous. Everyone wants something from fast food. Most customers want quick service, often 24-hour service,  from happy and enthusiastic workers. Foodies want higher quality ingredients and new menu items. Parents want “clean” and “natural” food for their children. Most customers want the prices low that define fast food. What does the Fast Food industry want? They want to meet  all of these goals and find a way to pay for an increase in the minimum wage. Shall we dive right in and see how happy our future meals will be?

Typically, when the economy is good and income rises, families spend more money on food. For fast food customers, that means ordering fewer items from the value menu or moving upscale to a different restaurant, perhaps moving from fast food to full service. Fast food tries to keep up with these trends but often fails. McDonald’s, for example, has tried adding steak and even lobster, but customers always return to burgers and fries. Customers may switch from burgers to steak, but not a steak from McDonald’s.

All day breakfast is McDonald’s latest food innovation, and it seems to be working. Breakfast items usually cost less but are still quite profitable. However, offering two meals at the same time requires quite a bit of engineering genius, since even fries and hash browns are cooked in slightly different ways. The same is true of burger vs. eggs, and hamburger buns vs. english muffins. Changing settings on deep fryers and other equipment slows the kitchen. McDonald’s may revolutionize breakfast, but every new option comes at a cost.

Seemingly minor tweaks can have surprisingly high costs. The “clean” and “natural” trend is focused on items like… eggs. Customers have started to demand cage-free eggs. However, few customers understand that moving away from caged chickens requires extensive changes to the entire egg industry. Because the “cage free” movement is also happening in supermarkets, this double squeeze is creating high demand for cage-free eggs. The egg industry needs 10 years to change to cage-free, but to meet all commitments, it has to be done in just 2 years. That’s a classic formula for expensive eggs and “counterfeit” cage-free products. Removing preservatives, artificial coloring, antibiotics and other ingredients will similarly increase costs.

McDonalds, by far the largest of the fast food chains, consistently ranks lowest in customer service surveys. McDonald’s usually gets top ranking for breakfast items and fries, but when it comes to worker attitudes, queue times, order errors, special orders, addressing customer issue…  they rank at or near the bottom. There is a solution that can address customer service problems AND offset most of these new costs and customer demands. But before we look at solutions, let’s understand the problems.   

At a typical McDonalds or any similar establishment, there is a front counter with 5 or 6 (or more) cash registers. Customers pile-up by the counter as they wait to place their order, and then they wander around awkwardly in this “pile-up” (or at the edges) waiting to grab their finished order. When it’s slow, not all cash registers are manned. When it’s busy, workers mysteriously disappear from the cash register. When crowds are small, it’s easy to know which is “your” register. When the pile is 5 deep or more, you just following the customer in front of you… to an empty register. Should you jump to the left, to the right or wait until someone returns? The next step you take is almost assured to irritate some customer (or some customer will irritate you). Fast Food means you’ve got to be fast too, and a special order makes everyone grumble.

If you want a worker that is always consistent, never gets tired or flustered, can’t be irritated, is never angry… doesn’t that describe a robot? Interestingly, while McDonald’s does have at least one fully automated restaurant, the CEO of McDonalds (Steve Easterbrook) said that there are no plans to replace workers with robots if the minimum wage rises to $15. Of course, the former CEO of McDonalds (Ed Rensi) said that it made more financial sense to buy a robot than pay $15 per hour for a human being to bag french fries. Hmmm… that’s is a bit confusing.

What’s even more confusing is that in New York City and other locations, McDonald’s has rolled out walk-up robotic kiosks at McDonalds that let you place your order. With a robot. You can still go to the front counter, but the kiosks take your order and keep you out of the “pile-up” by the counter. Apparently, these robots don’t replace counter staff, they merely allow you to “create your own taste”, by requesting a special order. However, the kiosks take your complete order, not just special orders. Each restaurant typically installs 6 to 8 kiosks, which provides enough coverage to take all of the orders that are currently handled by counter workers.

Looking at these kiosks, they will definitely improve service. You have a much better chance of getting a Big Mac without pickles with a robot than with the counter workers. The robots will never get tired and cranky, or irritate you by paying attention to another customer or co-worker. Even if every kiosk does not turn on every feature on day one, in tourist heavy areas, these and similar kiosks can communicate in multiple languages. That’s not only a great “free” feature, but it is something that you just can’t “turn on” with human workers!

McDonald’s already has kiosks in 2,000 restaurants and is now headed towards a massive rollout. Wendy’s has introduced similar kiosks and expects many of their 6,000 franchise operators to adopt them by the end of 2016. Panera has done likewise and expects to have kiosks in all of its locations in a year or two. At Panera, customers place up to 60% of their orders via kiosk.

The kiosk trend has moved into full-service restaurants like Olive Garden and Chili’s. Here, the kiosk is a tablet that stays on your table. You can order what you want, add items to your order, add a coffee or request a refill of your soda and pay for your meal. All without that often difficult problem of getting the waitstaff’s attention when it’s busy. That little bit of extra difficulty means that dessert doesn’t get ordered, customers skip that extra side-dish and revenue walks out the door. These table top tablets improve customer satisfaction, lower operating costs and may generate additional revenue.    

As the economy improves a higher minimum wage is inevitable. The new wage may not be $15 per hour, but it will be higher than it is today. Service and performance problems could be handled by hiring staff that is more proficient at certain tasks. But more requirements means higher pay and cost for testing and training. That makes this staff even more expensive than a robotic replacement.

Robots are headed to a restaurant near you, but probably not too a family owned restaurant. Not for a while. Robot suppliers and consultants will work best with big chain restaurants. Family owned operations will be late adopters. Besides, while big chains may have a technological advantage in serving up your breakfast order, old fashioned, slow paced human waitstaff may be an important differentiator for mom and pop restaurants.

Something similar happened with bookstores 25 years ago. Barnes and Noble and other regional bookstores chains went national and undercut the prices in small bookstores. Half of America’s small bookstores were wiped out. But a decade later, book buyers realized how much they  liked the traditional small bookstore experience. After that, the small bookstore returned, although in more recent years the ebook has challenged the small bookstore, AGAIN. It’s hard to say if the human touch will save family owned restaurants, but in a few more years the experience you get from a typical small restaurant and a super automated fast food restaurant will be larger and clearer.

One thing that is already abundantly clear, is that the 3.6 million fast food jobs today will shrink dramatically over the next few years. By 2020, as many as 2 million of these jobs will be  automated. After 2020, a robot arm to hand completed orders to customers, more automated kitchen equipment, and soda machines operated by customers will eat away at employment until it drops below one million workers.

We want a lot from our fast food. If the robot revolution overtakes McDonald’s and other big chains, they can afford to provide the better ingredients we want while finally tackling their most intractable customer service problems. Customers say they want fast food workers to be treated fairly and be well paid, but is that your top concern when we’re waiting in the pile-up? Even though the economy is improving and customer tastes are moving upscale, a lot of families depend on the value menu and will strongly resist price increases.

The robots moved slowly into place and now they are on our tables and in our favorite fast food hangouts. Deep down, we want more robots. When you order your McBreakfast, you want your coffee now and then you want to get out. Few of us bother to make any connection with the people who work hard… VERY hard.. to meet our expectations. But we want what we want, and we want it the same every time. We don’t want excuses that people are out sick or late because of the weather. We want superior service from the first minute a worker arrives until their last hour of overtime. We say we want workers to be well treated, but we mean we want robots. Which is exactly what we’re going to get. And that my Niccolls worth for today!


Posted in Best Practices, Delivering Services, Employment, Improvement, Continuous or Not, Robots, Uncategorized | Tagged , , | Leave a comment

Adidas’ SpeedFactory: A Big Step Towards Onshoring Work?


For years we’ve talked about a robot revolution, but robots are nothing new! Robots have worked in factories for decades. They’re incredibly fast, but they’re also expensive to program, and they can only follow very specific instructions. If they receive a tray of bolts, each bolt has to point in the same direction, if not the robot gets hopelessly confused. Whole factories were often redesigned before the robots could arrive. The new generation of robots can be dropped into the existing workplace and left to figure out little inconsistencies. Instead of being programmed, they learn from  mistakes (which costs less). New robots are arriving… somewhere near you!   

The gold standard for factory automation is “lights-out” manufacturing, which is complete automation with zero on-site humans. The first lights-out factory was built in 2001 by FANUC, a Japanese robotics firm. Other full lights-out factories exist, but the technology has only recently become cost effective and robust. Still, a lot of progress has been made since 2001.

The most advanced factories in the world have become automation incubators, where factory managers and automation technologists are learning the best practices for automation. Factories have multiple production lines, with each line producing a part or a complete product. While lights-out factories are rare, individual production lines in factories across the world have increasingly been totally automated.

By just looking at a factory, the signs of automation are not always obvious. Automated factories have few if any workers, which means that parking lots, the cafeteria, locker rooms, bathrooms and other facilities are gone. Without human beings, the factory floor is much smaller and more compact, hallways, reception areas, staircases, elevators, and other areas are much smaller. Even the heating and air-conditioning systems are much smaller.  All of this leads to a smaller, less expensive factory.

Like any big “disruption”, a few lights-out factories may be built in the next few years… the technology is certainly there… but it is the modest innovations that move technology forward. One of these steps is the SpeedFactory. Adidas, the global athletic wear company, has put one and one together and got three. By making a highly automated, but not quite lights-out, factory for athletic shoes, a series of other benefits suddenly materialize.

A SpeedFactory is a highly automated factory with a dramatically lower cost of operation, that is built onshore (where customers live). The combination of reduced staffing costs and reduction/elimination of transportation costs generates a third benefit, the ability to quickly provide products to customers. The lower cost of operation allows them to build the factory onshore, which further reduces the cost of operation by eliminating transportation cost, which gets  the product to the customer faster because the product is already nearby.

That speed difference is not just a convenience factor, it leads to more sales. Athletic shoes, consumer electronics, fashion items and many other goods either changes models quickly or change seasonally. When new products are released, some specific model, or option, or color is usually in higher demand than expected. That means it will be sold out, and restocking could take weeks or longer. Unless you just happen to have a factory nearby that can restock. SpeedFactories reduce restocking times and reduce the number of times a customer buys a competing product.    

Adidas has already built a SpeedFactory in Germany, and another one outside of Atlanta Georgia will be completed before the end of 2016. We have reached a tipping point, where manufacturers can move manufacturing back to America. Every manufacturing situation has different economics, but if manufacturing shoes and clothing can be onshored, then so too will many other manufactured goods.

Even if we only look at athletic footwear, Adidas’ has a lot of competitors: Nike, Puma, Converse, New Balance, Fila, Asics, Skechers, to name a few. That’s going to be a lot of new factories being built in America and Europe. Expand that out to electronics, and other industries, and we may see a big uptick in factory construction. That’s the good news. But the other news, not quite bad. But not particularly good either, is that while factory work will return to America, that won’t translate into many new factory jobs.  

No matter how many SpeedFactories are built we’re not going to return to the high of 240,000 shoe industry workers we had in 1966. Still, with just 2,000 shoe workers in 2014, an improvement would be welcome.

While SpeedFactories may not provide much employment, they do provide consumer benefits. No matter how great a range of products we have, consumers always want something unique. Customized athletic shoes are becoming big business. Customers can request mix and match pattern, different colored soles, laces, eyelets, and various finishes. Shoes can even be printed with selected graphics or something you designed yourself, for a completely one-of-a-kind shoe.

In lower Manhattan, Converse has a shoe store that is also a factory, creating custom sneakers while you wait! This is a tempting model for any fashion store. Using a small warehouse of custom parts plus printing machines to create exactly the product you want. A smaller version of SpeedFactory technology could operate in department stores and malls for a custom purchase experience. Not that long ago it was a revolutionary idea that you could get your eyes examined and pick up your eyeglasses just an hour later. SpeedFactories technology could be applied to a lot of consumer goods. More options, less waiting. That’s a great deal!    

While the SpeedFactory may revolutionize 21st century manufacturing, it’s not the first time manufacturing was “re-shored” to America. In the 1990’s, imported cars were rapidly gaining share in the US car market. Soon, imported cars ran into import limits and tariffs. The solution was to build foreign cars on US soil (Kentucky, Ohio, Indiana) and thereby be exempted from import limits and tariffs. The cost mechanisms were slightly different, but moving onshore changed the game for car manufacturers, and brought jobs back to the US.  

Which raises a rather large question. What happens to the jobs in offshore locations? As more work moves back onshore, jobs that were relocated offshore will go away. At the same time, the work replacing technology used in SpeedFactories and lights-out factories will become the standard for new factories, wherever they are built.

With over 100 million manufacturing workers, China is the world’s manufacturer. Yet, the technology that makes the SpeedFactory possible will make it very difficult to maintain this title. Employment in China will be squeezed on one side by jobs lost to onshoring, and squeezed on the other side by competitive pressures to automate Chinese-owned factories. There are stories everywhere about how robots will soon take over half more of the world’s jobs. But in China, that will happen even faster, because they will lose domestic jobs to automation, plus they will lose previously offshored jobs that return to the US and Europe.

In most developed nations, the ebb and flow of jobs due to automation and on/off-shoring is largely a corporate matter, and corporations have closely followed profit incentives. China, however, is a bit different. China is one of the few remaining Communist governments, and they see full employment as their primary tool to maintain political stability. Corporations in China exist to provide jobs. Yet, there has never been a Communist nation with so Capitalistic an interest in profits as China. When the squeeze comes, what will China do?

The answer comes in two parts. Part one, China will aggressively pursue new markets, both for domestic manufacturing and for outsourcing, to replace lost jobs. That means taking over work from Vietnam, Cambodia, Thailand and other low-wage manufacturing markets. As automation raises productivity, China will be able to underbid competitors. At the high end, China will push outsourcing services into high-end knowledge work (especially in banking, insurance, and financial), while simultaneously expanding the footprint of Chinese-owned banks and insurance companies.

Part two, China will open factories in America and Europe. Just as car manufacturers moved to America when the financial incentives were right, the lower cost of new automation plus the elimination of transportation fees provide powerful incentives for China to co-locate factories where products are sold. Within this answer is a second question. When Chinese outsourcing programs are shut down, will China offer to re-shore these services themselves, in order to keep their clients?

The technology that makes SpeedFactories possible will disrupt both traditional manufacturing and outsourcing. Consumers will greatly benefit from these new factories. America will gain a few jobs, perhaps more that a little additional taxes when a wave of new automated factories are built in the US. China, however, has the most to lose as worldwide employment in manufacturing plunges. However, we have seen that China has been flexible in moving from one area of employment to another and the people of China no longer wants assembly line jobs.

In the short term, at least, the consumer will be the big winner. More choices and continually lower prices. In the long term? There are so many disruptors that we can expect to hit in the next few years that it’s difficult to say anything other than, “Everything is about to change!”. That’s my Niccolls worth for today, and I’m sticking with it!

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Property Insurance Drones? A Breakthrough In Innovation!


Today when we hear about drones we are likely to think of military drones flying around the Middle-East, tracking down and taking out terrorists. Drones have just as many legitimate civilian uses. The explosion in the number of civilian drones started when photographers realized that drones could give them once-in-a-lifetime shots of famous landmarks. An amateur photographer might spend days trying to get just the right angle for a unique photograph of the Brooklyn Bridge or the Empire State Building, waiting for that brief moment when the lighting is just right! But once you’ve used a drone to zoom in from above, and circle around, you see all sorts of new possibilities, even for the most photographed subjects. Once you go drone, you just can’t go back!

It’s not that photos of building and landmarks have never been taken from above landmarks. Photographers have been taking aerial photographs since they could first get cameras into the air. However, until recently, aerial photography was almost exclusively the domain of the professional photographer, with an assignment that could pay to rent a plane or helicopter. Non-professionals could still take great aerial photos, but these were mostly happy accidents. A chance happening where a photographer was in just the right place at the right time. Cheap drones let every photographer take to the air, whenever they want. More recently, whenever you want… after you fill out some paperwork, and not near any public events.

Still, most of the time, most of the skies are open to the public. Even drone purists admit that an unlimited number of unidentified drones competing for space near national monuments is a bad idea. Drones can cheaply deliver new functions. For example, as the evidence for Global Warming continues to pile up, so too does storm damage to coastal cities and communities. Assessing the damage, so that victims can be quickly paid by their insurance company, is often time-consuming, delaying payments. Drones can help insurance companies speed up the process of assessing and paying for property damage.

In a storm-damaged area,  property needs to be inspected at once. Foundations may be cracked, or roofs may be blown off. Walking abound on the ground some information, getting a clear top-down view of a home is vital. Going up and down on a ladder, or getting a full 360 view of the property is time-consuming. Careful assessment of moderate damage, especially to the roof, can make assessments dangerous. Damage to other parts of the building, partially uprooted trees, and other dangerous conditions make progress on the ground difficult. Owners may have evacuated a storm area, making it difficult for assessors to get access to multiple properties. The entire area may not be accessible from the ground if local roads are flooded or blocked. Drones can fly over these obstructions, and collect needed information.

Even without advanced robotics and artificial intelligence, simple remote controlled drones with high-resolution cameras can quickly and easily survey an entire neighborhood. HD video has given way to 4K (4 x HD resolution), and even higher 3D resolutions are available. Some systems put together 10 4K cameras into a ball-shaped holder, creating a 40K system that stitches together all of the images into a single nearly 360 3D stream of video. The resolution is so high that you can do a quick grid pattern fly over across a damaged area, and then sort out critical information later from the high-resolution images. Drones will revolutionize the work of the 300,000 claims adjusters, appraisers, examiners, and investigators employed in America today.

The idea of a claims adjustor in the sky isn’t just fantasy or a clever idea for some time in the future. Allstate insurance has started to use drones to examine property damage, outside of San Antonio, Texas. A recent storm did a lot of damage to the roofs of homes. Using a drone has proven to be faster, safer and more cost effective. As a bonus, the firms that manage the drones convert the images into 3D models that provide a better way for property owners and insurance companies to visualize the extent of the storm damage.   

Getting to your home and accurately assessing the damage after a storm is time-consuming and sometimes risky. That delays the policyholder from getting paid and starting to rebuild their home.  If we continue to see “storms of the century”, that cause unprecedented property damage, the insurance industry needs a more efficient way to quickly assess large numbers of houses. The combination of drones and high-resolution photography sounds like just the right solution. At least, that’s my Niccolls worth for today and I’m sticking with it!  

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Robotic Reporting… The Tipping Point​



A robot used words from this article to create this word cloud!

For the past several years robots have quietly infiltrated newspapers and magazines, slowly replacing reporters. Sounds like the plot of a “B” movie? Maybe, but robots have learned how to write like humans, how to do research on the internet, and are becoming a part of the regular publication process. There are robots among us, and they are taking over… our jobs! Now, the takeover is about to go into high gear!

The idea of robot writers has been around for decades. After all, many forms of popular literature follow simple formulas. Take romance novels. A college professor, Robert James Waller, taught his students that romance novels follow a simple formula. Waller wanted to prove this to his students and spent one summer writing, “The Bridges of Madison County”. It became a top selling romance novel, and later a top grossing movie.

A year later (1993), the next obvious step was taken and a computer wrote a romance novel in the style of Jacqueline Susann, a top-selling romance novelist. The book was readable but never became a best seller. Nor has any robot written a top-selling book. However, computers have been successful at writing news stories. For example, PR Newswire writes thousands of short (2-3 paragraph) stories about how well publicly traded corporations performed this quarter. They look something like, “Company X has released its quarterly financial results, declaring a dividend of $0.15, exceeding analyst predictions by 20%”, and so on.

Before this task was automated, PR Newswire had three problems. First, reporters hated this work; it was boring. Second, while thousands of publicly traded companies need stories written every quarter, reporters are often called away to work on more urgent stories; not all financial reports were written (or written on time). Third, when writing repetitive stories that have a lot of numbers, human writers tend to make a lot of mistakes and need to write retractions. Robots took over 2 years ago. Now 100% of the stories are written, on time. With no mistakes.  Just in case you’re wondering, no editor has yet managed to hurt a robot’s feelings with last minute assignments, or boring tasks.

Strangely, robots have been amazingly successful as sports writers. They have also solved an old problem. There are always more sports events than reporters. National newspapers can cover major games, but no newspaper has enough reporters for EVERY game.  Not just major and minor leagues. What about college or even high school teams? How much coverage do women’s professional sports get? Emerging sports, such as eSports (electronic gaming) are ignored. Yet, eSports have huge cash competitions (up to $20 million grand prizes), sell out stadiums (45,000 seats in Seoul, South Korea) and have massive on-line viewership (32 million viewers for a recent competition).

Robot reporters are so fast and cost effective, they can write stories for “micro” audiences too small to justify a human writer. Consider a high school volleyball team. All of the team members, faculty, friends and family might total just 100 readers. No professional publication could justify the cost of a reporter (and publication costs) for this audience. Yet, a robot could cover every game.

If the mother of a volleyball player reads the New York Times, she would tag her subscription with her interest in local stories about volleyball. Larger events (a college game?) might show up in the custom print version of the NYT, and the high school game might would show up in her digital version. Robots can provide this customization all news, not just sports. Local political news, economic issues, weather, and other stories that impact just a small group that are ignored today could be written by robots. Robots can also run user forums and write custom letters to answer individual user questions. Robots can make the news more personal.

Newspapers and magazines are desperate for some way to stop the slide in readership and revenue. Customized news may be their best hope. It so happens that two enormous opportunities have arrived for robot writers… the 2016 Olympics and the Presidential Elections!

I’m writing this blog just after the close of the 2016 Olympics. If you closely followed the games, you may have heard about the Washington Post (WP) using robot writers, from it’s homegrown “Heliograph” project. Heliograph robots will write simple stories, mostly Tweets, and social media, supplementing their team of sports writers. No one expects any of these stories to win a Pulitzer prize, but by relieving their reporters of the duty to issue Tweets, Heliograph allows human reporters to make better use of their time, on higher value stories.

In the last few years, social media has often been humiliating for reporters. Professional reporters are supposed to be first on the scene for news stories, but some random guy with a cell phone usually gets out the first Tweet, Facebook comment, or Pinterest photo. Of course, that “random guy” might misspell a name or report the score wrong. A professional reporter has to get it right the first time… even when a delay of a minute or two means that you send out Tweet #1,000 rather than Tweet #1.

Speaking of sports events that don’t get enough coverage, the Paralympics will start in Rio on September 7th. The Paralympics is the world’s biggest international competition for athletes with physical or mental disabilities. It receives far less coverage than the Olympics, even though there is as much drama and as many record-breaking performances.

Consider the infamous Oscar Pistorius, a legless runner whose top speed in the 100m sprint is just a second behind Usain Bolt. Looking for human interest? The Olympics banned nearly the entire Russian track and field team. In the Paralympics, EVERY Russian team has been banned. Other athletes have faked disabilities in order to win gold medals. The Paralympics has incredible stories to tell. There just aren’t enough reporters to tell these stories.

Of course, if you live for scandals, few events can stand up to the Presidential Election! Political coverage faces the same challenges as sports. Every publication will cover the Presidential race. Senators? Sure. Congressmen… yeah. But state politicians? City officials? When the elections end, how many reporters will be left to cover local political beats? At most newspapers today, the answer is… unfortunately… just about none.

Associated Press and Forbes use robots to produce quarterly financial statements. The Washington Post is all-in on robotic reporting. Forbes Magazine printed at least a few software generated articles. A reporter at the LA Times created, “Quakebot”, to monitor for seismographic data and automatically generate stories after each earthquake. The L.A. times printed at least one Quakebot story. Interestingly, Quakebot was based on an earlier L.A. Times “bot” that writes stories on homicides.

The L.A. Times’ parent company, TRONC, owns The Chicago Tribune, Orlando Sentinel, Baltimore Sun, Sun Sentinel and Hartford Courant. released a video that explains their new digital business model. They plan expands the use of robotic reporters and uses Artificial Intelligence (A.I.) to research stories, and manage marketing. Machine Learning will be used to analyze the behavior and reading habits of consumers, increasing engagement. A.I.’s that provide real-time analysis of reader data could easily move from supporting editorial decisions, to making them. Could a robot editor be in the works?

Imagine that a TRONC A.I. manages editorial and marketing decisions. Editorial decisions would be data driven, market data driven. The A.I. monitors trending social media stories, reads competing publications, predicts which stories will be popular, polls readers, and determines where there are (profitable) publishing gaps.

Editorial decisions and marketing would be different sides of the same coin. TRONC’s video is clear that their FIRST stories need to pay the bills; only after expenses are covered will their newspapers have resources to write other stories (that address social justice, or win a Pulitzer, etc.). If robots don’t already work for your favorite publication, they will be soon. Print and news media need something new to lower their costs and stop the erosion in readership. Robots will not just cut costs, they might bring back readers. The number of reporters will shrink as robots take over the management of social media, but research, marketing, and even editorial functions are under just as much cost pressure and will also see some automation.

Wouldn’t it be ironic if the headlines about the robot revolution… will be written by robots? Probably! One thing is sure, more of the content you see in newspapers and magazines will be researched, written and marketed by A.I.s. There will be displacement in employment, but we may also enter a golden age of customized news. That’s my Niccolls worth for today, and I’m sticking by it!

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UBER’S Latest Pilot Offers Free Rides

File illustration picture showing the logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign

Photo: All Rights – REUTERS/Kai Pfaffenbach/Files

Robots have arrived and they are sweeping citizens off of the streets of Pittsburgh! No, they didn’t arrive by flying saucer, these are UBER driverless cars, and a ride in a robot UBER is FREE! By the end of the month, UBER will launch its pilot program in Pittsburg. When you order a car, you decide if you want to try one of their 100 robot cars. Depending on demand, you may get a robot car or a regular car. If you do get a robot car, your ride is on UBER. Free taxi rides? Resistance really is USELESS!

Traffic laws vary from location to location and most are unclear on how to deal with driverless cars. That’s why UBER’s driverless cars will each have… a driver. For decades it has been legal to turn on cruise control and other “assistance” features. At least as long as there is a driver in the car. The latest car driving software is considered an extension of cruise control. Turn on all the options you like… as long as a driver remains in the car. But, remove the driver and who has legal responsibility? If there is an accident or a law is broken, does the ticket go to UBER or the car manufacturer? Who do you sue?

Today, it is illegal in all 50 states to drive without car insurance. But today’s insurance contracts don’t have clauses for driverless cars or are written so that it is not clear if they allow driverless cars. For a pilot, UBER can self-insure or negotiate a special agreement with just one insurance company. A national agreement with every insurance company will take more time.

The “driverless car with a driver” model will undoubtedly be used throughout the pilot, but it will still address two important issues. First, the public will become familiar with robot cars, and see they really do work. Second, UBER will collect enough real world data… up to 500,000 hours of driving data every month… to perfect the software their latest acquisition (Otto) provides.

UBER also announced a $300 million partnership with Volvo, to develop new driverless cars. Not surprisingly, the Pittsburgh pilot will use Volvo SUV’s that are fitted with special sensors and upgraded software. Soon, though, a driverless car will look very different from today’s vehicles.

As driverless cars evolve, the steering wheel, the driver’s seat and other features that are needed for a car to work, will no longer be needed. Removing this equipment allows manufacturers to dramatically redesign the car interior. Should all seats face each other? Do buyers want their car to be a conference room on wheels, with a work table? If buyers want a quiet work space, driverless cars might work best as electric vehicles. Autonomous cars may spawn a new category of car.      

Which explains this week’s Ford announcement. Ford said that it will release its own fleet of autonomous cars by 2021. If Volvo is releasing an autonomous car NOW, how can Ford wait until 2021? The answer is that Ford is talking about a different type of vehicle. The 2021 target is for a consumer level vehicle, the complete redesign we just discussed, without a steering wheel or driver’s seat. The Volvo will, obviously, still have the old equipment. Other firms may show up in the near future that offer autonomy retrofits to existing vehicles. However, because some journalists confused these two types of vehicles they misunderstand how quickly self-driving cars will impact employment. Let’s set the record straight!

Here’s the misunderstanding. If Ford releases self-driving cars in 2021, then by 2025 there should be many self-driving cars. So, a lot of cars and trucks and other vehicles will convert by 2030. That gives us 15 years to absorb the changes this technology brings. This is a reasonable schedule,based on 20th-century assumptions. Especially the assumptions of how quickly “Detroit” (remember when that meant the car industry) can adapt and put out a new type of car.

However, all of those numbers are about consumer cars.  Consumers are interested in self-driving cars but are not demanding it. Still, fewer consumers have a clear vision of what makes a great self-driving car. Firms that employ professional car and truck drivers will make use of these cars when they arrive, but they are not waiting for these vehicles. By the time Ford sells its first “true” self-driving car, most professional driving jobs will have been replaced by robots.

Companies like UBER and Lyft will be first movers, doing whatever they can to adopt autonomous cars. There is a massive financial advantage to eliminate the cost of drivers. There is also the matter of UBER’s losing battle to classify drivers as “non-employees”. UBER attempted to settle the matter for $100 million, but that has been rejected by an appeals court. The pilots started in 2016 will expand in 2017, and may involve more than taxis and private cars.

After UBER? Big trucking firms cannot hire enough truckers, and the gap is growing, driving up wages. In order to keep up with the work, overworked drivers are making bad decisions that burn more fuel, cause excessive wear and tear on the vehicles, and cause sometimes fatal accidents. These companies are VERY motivated to get driverless vehicles on the road.

Without the cash reserves of UBER, trucking firms will rely on a combination of retrofitting some trucks, while replacing the oldest vehicles with the latest autonomous trucks. Expect transportation firms to fill the “driver gap” with thousands of autonomous trucks in 2018 and 2019.

Then there’s Fedex and UPS. Eventually, Amazon and other Internet merchants may steal work from trucking firms when air-drones are available, but let’s assume that we still have a few years before that happens. By 2019, if not sooner, some changes will have been implemented to traffic laws and insurance. Not every vehicle will be autonomous, but package delivery services will have pilots underway and some of these vehicles running on live routes.  

Small and medium sized companies will still own millions of old style trucks and company cars.  These firms may continue to use these cars, buy their own driverless cars, or… order vehicles from UBER on demand. Making a large number of consumers and small businesses give up their dedicated vehicles for shared vehicles on demand is a HUGE part of UBER’s $60 billion valuation. It’s hard to predict how this will impact employment in America, but it will certainly speed up the movement to replace drivers. By 2019, every small business in America will be at least thinking about whether they should replace the company truck.  

In 2016, robots will drive real passengers around Pittsburgh before the end of the summer. After that, it’s just a question of how quickly autonomous vehicles spread through the US, and the world. Ford’s target of 2021 for a self-driving car is reasonable, but not groundbreaking. When Ford is ready to enter the autonomous car market, it is likely to be crowded with Ford’s traditional competitors, as well as new players (such as Apple and Google). And that’s my Niccolls worth for today!

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