Music Festivals. The World Cup. Beach volleyball. Bike rides. Beer gardens. I’ve been taking time to enjoy the summer. Not spending much time in front of a computer analysing financial language and stories.
I’ve not been entirely idle though. I have also been contemplating what success might look like: maybe in ten years no human will read financial information – and lots of well-paid finance workers will be Deliveroo riders or driving Uber cars. It seems odd that technology companies like AirBNB and Uber are trying to “disrupt” taxis and hotels. I never got the feeling that people who do these jobs were making excess profits, in fact the reverse, they seemed to be the lowest income groups in the economy.
Why are techology companies disrupting taxi drivers, rather than lawyers?
So why aren’t technology companies trying to automate the jobs of highly paid lawyers, public relations, corporate finance, tax accountants, compliance officers, management consulting etc ?
And I think I’ve found the answer in a paper by Adair Turner at the Institute for New Economic Thinking. His paper is called Capitalism in the age of robots: work, income and wealth in the 21st-century
He points out an interesting reason that the above jobs are less susceptible to being eliminated by automation. This is not because computers and machine learning can’t be applied to financial or legal sectors – there is a huge amount of AI that could give “knowledge workers” an advantage. Instead, Adair Turner suggests, that law and finance jobs won’t disappear because they are competitive, zero sum activities. As in competitive sport: there is a winner and a loser.
Zero sum games
- If we automate cleaning hotel rooms, hotel cleaners will be out of a job.
- But if we automate analysing legal documents, lawyers will keep their jobs. But the intensity of their research will increase.
His explanation is:
“Precisely because this is a zero-sum activity, in which what matters is not how most efficiently to produce a defined product or service, but how effective one side is versus the other, there may be literally no limit to how much processing power lawyers will use in support of human judgment, and the jobs and income levels of top lawyers may well be safe, even if at a more junior level manual search activities are automated away.”
Love means nothing in tennis
It’s the equivalent of replacing a wooden tennis racquet with a graphite one. Graphite tennis racquets did not mean that professional tennis players lost their jobs. Instead they hit the ball harder and played with more intensity.
The analogy with tennis racquets goes further though. The lighter frames and bigger sweet spots meant that players could hit the ball harder, tennis became a much more physical game. Though both left handed, Rafa Nadal’s build and style of play is very different to that of Rod Laver.
But the improvement in racquet technology has been the same for players on both sides of the net. A zero sum game, there is still one winner and one loser. And the racquet technology has put greater physical stress on the players bodies, so they get injured. Not just Federer in his mid 30s, but Andy Murray, Rafa Nadal, Stan Wawrinka and Novak Djokavic have all had to take extended breaks due to injury.
Games without frontiers
I’ve seen this in finance too. Excel spreadsheets, email, voicemail, call logging technology might make the job easier – but it also makes it more stressful. One of my competitors died of a heart attack in his early 30’s. Another colleague I used to work with has taken a prolonged break due to stress related illness.
This has the odd conclusion that as we automate predictable physical activities, like hotel cleaning or fork lift truck driving, an ever increasing proportion of human activity will be zero sum games like law and finance. And these competitive “winner takes all” activities, will become more, not less stressful. Most corporate financiers won’t lose their jobs to become Deliveroo riders – but the stress and threat of losing out to the competition will weigh ever greater on their shoulders. So, on a second dimension, enabling technology has made these jobs harder and less enjoyable.
Law without tears
Reverting back to my project applying advances in Natural Language Processing to financial language. I’m not sure that this is a zero sum game. Even before I started playing around with these ideas, I had noticed that Chief Executives of successful companies LIKE writing in their own idiosyncratic way. Examples would be Games Workshop or Burford. The former designs and sells fantasy miniature figures. Games. The latter is a litigation finance specialist. Lawyers.
Though very different, both of these companies have increased in value many times over, vastly outperforming the wider stockmarket. Baggers. The type of companies I’m interested in. I bought shares in these companies for the simple reason that it was a pleasure to read their reports. I liked the way that management explained what the company did, and what challenges they faced and how they think about the future. While I enjoyed reading their reports, it seemed to me, that it was almost as if the management were enjoying themselves too.