A Bright Robot Future Awaits, Once This Downer Election Is Over
By Andrew MayedaAndrew Mayeda
October 24, 2016

Imagine robots performing surgery or directing navy fleets, delivering food to the world’s poor or harvesting energy in space, James Canton told hundreds of entrepreneurs in San Jose one recent morning.

As a vision of the future, it was far removed from Donald Trump’s depiction of America as the rusting shell of a once-great economy. It was hard to see much common ground with Hillary Clinton’s baby-steps reformism, either.

But Canton argued that his scenarios could come to pass, in an “autonomous economy” run by intelligent machines. “There’s been all this almost ridiculous talk of, robots are going to steal our jobs, they’re going to end us,” the futurist author told the annual RoboBusiness conference. “How about, liberate us?” Or help us colonize Mars.

Silicon Valley often seems to inhabit another planet already—especially compared with a political world founded on 200-year-old documents, where nothing beats a folksy speech at a factory. Rarely has the gulf loomed as wide as in 2016, though.

Sharing the Gains

On the campaign trail, a dark view of the U.S. economy has predominated. Trump’s America-first line on jobs and immigration has been denounced by Valley stars such as Facebook Inc.’s Mark Zuckerberg. But Clinton, who got most of the industry’s campaign donations, is also backing off from trade deals that the tech world favors. Meanwhile, global financial elites are fretting over the failure to share out gains from globalization and technology, and warned of a populist backlash.

In that event, the Valley—a place that prides itself on finding solutions—risks becoming seen as part of the problem.

Aaron Levie

“It’s a depressing election in many ways, when you think of the rhetoric the campaigns have focused on,” said Aaron Levie, chief executive of business-software maker Box Inc. He cited the pessimistic tone of much of the campaigning, and the “closed-off” version of America promoted by Trump.

Tech entrepreneurs mostly don’t do depressing, and they don’t really get it when others hit that note.

“There’s no fighting the progress that’s happening,” Levie said in an interview at Box’s headquarters in Redwood City, California, where employees can serve themselves kombucha tea out of a hollowed-out Volkswagen van, or play arcade games designed by co-workers. “We have a choice,” Levie said. “We can be leading that future or we can kind of hold it off and slow it down and try to bring back jobs that are not as efficient.”

Box employees relax at the company's headquarters in Redwood City, California.

The technological progress he’s talking about isn’t a new phenomenon. During the halcyon century of American growth that followed the Industrial Revolution, inventions like the telegraph and automobile boosted productivity and living standards.

But sometime in the early 1970s, the virtuous loop under which productivity and wages rose in tandem, ensuring that gains were widely shared, broke down.

The Great Uncoupling
U.S. hourly wages haven’t kept up with productivity
1964 1970 1980 1990 2000 2010 2016 114.8 265.1 Normalized as of 1/31/64 Hourly real wages in the U.S. Business output per hour worked in U.S. on 6/30/16
1964 2016 Normalized as of 1/31/64 Hourly real wages in the U.S. Business output per hour worked in U.S. on 6/30/16

That’s left some pundits worried about the current wave of automation. In his book “Rise of the Robots,” Martin Ford warns that machines may one day threaten human jobs in every industry, even those employing the well-educated and highly skilled.

Silicon Valley takes a sunnier view. In April, Zuckerberg laid out Facebook’s 10-year plan to “give everyone the power to share anything they want with anyone.” Connecting people on emerging platforms such as virtual reality will improve education, health and job prospects for all, he said.

A stream of money fuels the optimism. Venture capital for tech startups hit a record last year, and while it’s slipped somewhat in 2016, high-profile firms such as Uber Technologies Inc. and Snapchat Inc. are mulling initial public offerings. Tech executives occupy seven of the top 20 spots in Bloomberg’s list of richest people.

The wealth is on open display in Palo Alto, home to Stanford University and many Valley luminaries. In the Crescent Park neighborhood, where single-family homes start at about $3 million, crews of gardeners tend to immaculately curated grounds. At cafes along University Avenue, young entrepreneurs huddle with potential financiers over MacBooks and lattes. Business jets fill the tarmac of the local airport.

‘Singularity Is Near’

An hour’s drive away, in San Francisco, the influx of tech workers has helped push the median single-family home price to $1.26 million. Private buses carry them to jobs at Apple Inc., Alphabet Inc.’s Google, or Facebook. Meanwhile, one former mayor has proposed using a decommissioned aircraft carrier to house the city’s homeless, who throng the sidewalks along Market Street, home to Uber and Twitter Inc.

How much will the “second machine age” deepen such divisions? Last month, a trio of International Monetary Fund economists came up with some chilling answers. Even if humans retain their creative edge over robots, they found, it will likely take two decades before productivity gains outweigh the downward pressure on wages from automation; meanwhile, “inequality will be worse, possibly dramatically so.”

And if the robots become perfect substitutes, the paper envisages an extreme scenario in which labor becomes wholly redundant as “capital takes over the entire economy.” The IMF economists even invoke futurist Ray Kurzweil’s 2006 bestseller, “The Singularity Is Near.”

Silicon Valley executives say alarm bells have been ringing for decades about job-killing technology, and they’re usually false alarms.

Breaking Things

“This argument that the robot’s going to take my job should be that the robot’s going to change my job, and I’m probably going to make more money,” said Steve Cousins, chief executive of Savioke, which makes delivery robots for hotels.

To be sure, not everyone in the industry looks at artificial intelligence through entirely rose-tinted glasses. Tesla co-founder Elon Musk has expressed misgivings, and helped fund a group that works on safe AI. Microsoft Corp., a massive invester in the technology, has also backed policies to ensure that workers don't get left behind.

But many entrepreneurs see tech as liberating jobs, not eliminating them, and argue that it’s out-of-date rules that stifle labor markets. Sherpa Capital was an early investor in Airbnb Inc. and Uber, companies that are locked in combat with regulators. Shervin Pishevar, Sherpa’s co-founder and managing director, says that’s no accident, calling the firm’s strategy “regulatory arbitrage.”

“Stasis and monopolies are interesting, because if you can break them, you unlock a tremendous amount of economic value and job creation,” said Pishevar, who hosted a fundraiser for Clinton this election cycle.

Silicon Valley Clashes With The Presidential Candidates On Key Issues
  •   Clinton Trump Tech sector
  • Trade Opposes Trans-Pacific Partnership trade agreement, saying safeguards aren’t tough enough on labor, currencies and environment. Opposes TPP. Has called NAFTA a “disaster” and promised to slap tariffs on China if it doesn’t trade fairly. 73 percent of tech-company founders support free trade, according to a poll by Ferenstein Wire.
  • Regulation Plans to appoint a chief innovation officer to reduce barriers for entrepreneurs. Would issue temporary moratorium on new agency regulations and eliminate the most “intrusive.” Has sparred with government over regulation of everything from taxis to hotels.
  • Taxes Would slap a 4% surcharge on those making more than $5 million a year and claw back R&D tax credits from firms that move jobs abroad. Has promised biggest income-tax cuts since Ronald Reagan. Would cut corporate tax rate to 15 percent. Lobbying for more generous R&D credits, arguing U.S. has fallen behind at investing in innovation.
  • Immigration Would create a “startup” visa for entrepreneurs. Has slammed H1-B visas, promised to build a wall at the Mexican border and deport undocumented immigrants who commit crimes. Wants the government to be more open to skilled foreign workers.
  • Labor unions Has vowed to protect collective-bargaining rights, and is backed by unions such as the AFL-CIO. While denounced by union leaders, has garnered significant support among rank-and-file members for his “America-first” trade policy. Only 29 percent of tech founders have a positive view of unions, according to the survey by Ferenstein Wire.
  • Income inequality Has promised to make the wealthy “pay their fair share,” and raise the minimum wage. Blames the sluggish recovery and weak wage growth on the “policy of globalism.” Promises to put American workers and products first. While Tech founders tend to see growth as a bigger problem than inequality, according to polling, some have backed the idea of a “universal basic income.”
  • Cybersecurity / Privacy Invest in cybersecurity and get government and business to work together to provide access to encrypted communications. Supported the court order forcing Apple to provide access to an encrypted iPhone used by the San Bernardino shooter. Opposes heavy-handed efforts by law enforcement to access encrypted data.
  • Manufacturing Invest in partnerships between labor, business and government to “Make It In America.” Has promised to “bring back” manufacturing jobs from countries, such as China and Mexico, and penalize U.S. companies that move operations offshore. Argues support for manufacturing should focus on sectors that invest heavily in R&D in areas where the U.S. can compete globally.

Even Silicon Valley sees a downside to breaking things.

Pishevar is one of many tech-world supporters of a “universal basic income.” Y Combinator, an influential startup accelerator, is testing the policy in Oakland by handing 100 people between $1,000 and $2,000 a month, no strings attached, to study how the extra safety-net changes lives.

It’s a tacit admission that, as technology replaces jobs, society may have to place a floor on how far humans can fall.

Better World

It’s also evidence that Silicon Valley’s political beliefs are hard to place on the traditional spectrum. Tech author Greg Ferenstein says the industry typically supports environmental safeguards and more immigration, and opposes labor unions. And it favors bold leaps over baby steps. So, while many startup founders and investors support Clinton, they may be frustrated by the slow pace of change if she wins, Ferenstein says.

“They have a deep faith that the more people intermingle and share ideas, the better the world gets,” he said. “The quickest way to get a lot of traffic for a story in Silicon Valley is to write about how the world is improving.”

Maybe so—but in 2016, that’s proved a tough platform from which to run for president.