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End of the road: will automation put an end to the American trucker?

Americas 2 million truckers have long been mythologised in popular culture. But self-driving trucks are set to lay waste to one of the country’s most beloved jobs and the fallout could be huge.

 

Jeff Baxters sunflower-yellow Kenworth truck shines as bright and almost as big as the sun. Four men clean the glistening cab in the hangar-like truck wash at Iowa 80, the worlds largest truck stop.

Baxter has made a pitstop at Iowa 80 before picking up a 116ft-long wind turbine blade that hes driving down to Texas, 900 miles away.

Baxter, 48, is one of the 1.8 million Americans, mainly men, who drive heavy trucks for a living, the single most common job in many US states. Driving is one of the biggest occupations in the world. Another 1.7 million people drive taxis, buses and delivery vehicles in the US alone. But for how long? Having disrupted industries including manufacturing, music, journalism and retail, Silicon Valley has its eyes on trucking.

Google, Uber, Tesla and the major truck manufacturers are looking to a future in which people like Baxter will be replaced or at the very least downgraded to co-pilots by automated vehicles that will save billions but will cost millions of jobs. It will be one of the biggest changes to the jobs market since the invention of the automated loom challenging the livelihoods of millions across the world.

“I’m scared to death of that,” says Baxter, an impish man with bad teeth that he hides behind his hand as he laughs. “I can’t operate a pocket calculator!”

But Baxter is in the minority. Iowa 80 is a great place to check the pulse of the trucking community. Interstate 80 the second longest in the country runs from downtown San Francisco to the edge of New York City. The truck stop, about 40 miles east of Iowa City, serves 5,000 customers each day, offering everything they could need from shops and restaurants to a cinema, chiropractor, dentist, barber and a chapel.

Every week, a major tech company seems to announce some new development in automated trucking. Next month, the Tesla founder, Elon Musk, will unveil an electric-powered semi that is likely to be semi-autonomous. But most of the truckers I spoke to were not concerned by the rise of the robots. “I don’t think a robot could do my job,” says Ray Rodriguez, 38, who has driven up a batch of cars from Tennessee. “Twenty years from now, maybe.”

Nor do the managers of the Iowa 80 see their jobs changing any time soon. The infrastructure just isnt there, says Heather DeBaillie, marketing manager of Iowa 80. Nor does she think that people are ready for autonomous trucks. Think about the airplane. They could automate an airplane now. So why dont they have airplanes without pilots? She also argues that the politics of laying off so many people will not pass muster in Washington.

The family-run Iowa 80 has been serving truckers for 53 years, and is so confident about its future that it is expanding to secure its claim to being the worlds biggest truck stop, adding more restaurants and shopping space to the Disneyland of truckers.

But not everyone is so confident that truck stops will survive the age of the algorithm. Finn Murphy, author of The Long Haul, the story of his life as a long-distance truck driver, says the days of the truck driver as we know him are coming to an end. Trucking is a $700bn industry, in which a third of costs go to compensating drivers, and, he says, if the tech firms can grab a slice of that, they will.

Left to right: Iowa 80, known as the Disneyland of truck stops; Jeff Baxter, 49, with his truck after having it washed; Douglas Berry, 55, with his truck and trailer. Composite: John Richard for the Guardian

The only human beings left in the modern supply chain are truck drivers. If you go to a modern warehouse now, say Amazon or Walmart, the trucks are unloaded by machines, the trucks are loaded by machines, they are put into the warehouse by machines. Then there is a guy, probably making $10 an hour, with a load of screens watching these machines. Then what you have is a truckers lounge with 20 or 30 guys standing around getting paid. And that drives the supply chain people nuts, he says.

The goal, he believes, is to get rid of the drivers and have ultimate efficiency.

I think this is imminent. Five years or so. This is a space race the race to get the first driverless vehicle that is viable, says Murphy. My fellow drivers dont appear to be particularly concerned about this. They think its way off into the future. All the people I have talked to on this book tour, nobody thinks this is imminent except for me. Me and Elon Musk, I guess.

The future is coming. Arguably it is already here. Several states have already laid the groundwork for a future with fewer truckers. California, Florida, Michigan and Utah have passed laws allowing trucks to drive autonomously in platoons, where two or more big rigs drive together and synchronize their movements.

The stage has been set for a battle between the forces of labor and the tech titans. In July, the powerful Teamsters union successfully pushed Congress to slow legislation for states looking to broaden the use of autonomous vehicles. After arm-twisting by the union, the US House of Representatives energy and commerce committee exempted vehicles over 10,000lb from new rules meant to speed the development of autonomous cars. Many truckers came into the industry after being displaced by automation in other industries, and the transportation secretary, Elaine Chao, has said she is very concerned about the impact of self-driving cars on US jobs.

The Budweiser cans driven by self-driving truck.

But Ryan Petersen sees the Teamsters move as a speed bump at best. Petersen, the founder of Flexport, a tech-savvy freight logistics company, says fully operational self-driving trucks will start replacing jobs within the next year, and will probably become commonplace within 10.

Labor accounts for 75% of the cost of transporting shipments by truck, so adopters can begin to realize those savings. Beyond that, while truckers are prohibited from driving more than 11 hours per day without taking an eight-hour break, a driverless truck can drive for the entire day. This effectively doubles the output of the trucking network at a quarter of the cost. Thats an eight-times increase in productivity, without taking into account other benefits gained by automation, he says.

Larger trucks making highway trips, like those occupying the 900-truck parking spots at Iowa 90, are the lowest-hanging fruit and will be automated first, Petersen says.

Last year, Otto, a self-driving truck company owned by Uber, successfully delivered 45,000 cans of Budweiser in a truck that drove the 130-odd miles from Fort Collins, Colorado, to Colorado Springs. A semi-automated platoon of trucks crossed Europe last year in an experiment coordinated by DAF, Daimler, Iveco, MAN, Scania and Volvo.

But the automation that seems to most concern drivers at Iowa 80 concerns their log books. Truck firms are shifting drivers over to computerized logs and they hate it. The new system adds another layer of oversight to an industry that is already heavily regulated, and will limit where and when drivers can stop. A driver looking to add an extra 30 minutes to his ride in order to make it to the truck stop rather than rest up in a layby might find that option gone, under a system that is centrally controlled rather than filled in by him in the log books that occupy a long shelf in Iowa 80s giant trucker store.

The trucker holds a special place in American mythology: sometimes a symbol of freedom and the open road, sometimes a threat. Truckers entered popular culture from all directions, from the existential horror of Spielbergs Duel, to Convoy, the bizarre trucker protest song that became a global hit and introduced the world to CB radio slang Let them truckers roll, 10-4!

Left to right: Ray Rodriguez puts wheel-bolt covers on his truck; promotional material for Smokey and the Bandit; the Iowa 80 Trucking Museum. Composite: John Richard/The Guardian/Universal Pictures

In the 1970s, Hollywoods he-men wanted to be truckers: Kris Kristofferson in Convoy, inspired by the song; Burt Reynolds CB-slanging his way through Smokey and the Bandit I and II. Thelma and Louise took their revenge on a cat-calling trucker in 1991. Hollywood, presciently, had a cyborg drive a big rig in Terminator 2, and went full robot with Optimus Prime in the Transformers franchise. At the turn of the 21st century, the ever nostalgic hipsters love of trucker hats and T-shirts revived Americas fetishization of the long-distance driver.

But its a nostalgia out of sync with a reality of declining wages, thanks in part to declining union powers, restricted freedoms, and a job under mortal threat from technology, says Murphy. Truckers made an average of $38,618 a year in 1980. If wages had just kept pace with inflation, that would be over $114,722 today but last year the average wage was $41,340.

The myth is that the long-haul truck driver is the cultural evolution of the free-range cowboy from the 19th century, says Murphy. In fact, trucking is one of the most regulated industries in the United States. Every move the trucker makes is tracked by a computer. We have logs we need to keep every time we stop, pull over, take a leak. The trucks speed, braking, acceleration is all recorded. This is not a cowboy on the open range. This is more like 1984 than 1894.

Douglas Barry has been driving trucks since 1990. A wiry firecracker of a man, Barry says those pushing for automation are failing to see the bigger picture. The general public is just not ready to see 80,000lb of 18-wheeler flying down the highway with no one at the wheel.

“That big old rig could blow sky-high, slam into a school. It needs a human being. There isn’t a machine that can equal a human being,” he says. “Artificial intelligence can be hacked … Who is ready for that? I wouldn’t want my family going down the road next to a truck that’s computer-operated.”

He says the involvement of the tech companies has stopped people from looking for more holistic solutions to transportation problems. The answer is better roads, more delivery points for trains, streamlining the supply system not just looking for ways of cutting manpower.

A lot of these people at Google and so forth are very intelligent. But in a lot of ways they are out of touch with reality, Barry says.

Yet computers don’t get tired, don’t drink or take drugs, and dont get distracted or get road rage. Murphy, the author, says the argument that people are better than machines will not hold for long especially as more and more people get used to autonomous cars.

“The assumption is that we are living in some kind of driver utopia now and machines are going to destroy that,” he says. “The fact is that we have 41,000 highway deaths in America every year. If we piled those bodies up, that would be a public health crisis. But we are so used to the 41,000 deaths that we dont even think about it.”

“Virtually all those deaths are from driver error,” he says. “What if we took that number down to 200? Here’s how it looks to me. Thirty years from now my grandchildren are going to say to me: You people had pedals on machines that you slowed down and sped up with? You had a wheel to turn it? And everybody had their own? And you were killing 41,000 people a year? You people were savages!

“They are going to look at driver-operated vehicles the way people now look at a pregnant woman smoking,” he says. “It’ll be the absolute epitome of barbarism.”

It will also be a change in the workplace of historic proportions. “I watch a lot of Star Trek,” says Baxter, as he prepares to get back on the road. “The inventions of an innovative mind can accomplish a lot of things. I just dont want to see automated trucks coming down the road in my lifetime.”

Read more: https://www.theguardian.com/technology/2017/oct/10/american-trucker-automation-jobs

How about a little accountability for economists when they mess up? | Dean Baker

Dean Baker is co-director of the Centre for Economic and Policy Research.

Suppose our fire department was staffed with out-of-shape incompetents who didnt know how to handle a firehose. That would be really bad news, but it wouldnt be obvious most of the time because we dont often see major fires. The fire departments inadequacy would become apparent only when a major fire hit, and we were left with a vast amount of unnecessary death and destruction. This is essentially the story of modern economics.

The problem is not that modern economics lacks the tools needed to understand the economy. Just as with firefighting, the basics have been well known for a long time. The problem is with the behavior and the incentive structure of the practitioners. There is overwhelming pressure to produce work that supports the status quo (for example, redistributing to the rich), that doesnt question authority, and that is needlessly complex.

The result is a discipline in which much of the work is of little use, except to legitimate the existing power structure. In terms of the poor quality of work, it is easy to point to the failure to recognize the size and risks posed by the housing bubble in the last decade. This failure has been unbelievably costly to the US and the rest of the world.

If we compare the most recent estimates of the potential GDP of the US economy from the Congressional Budget Office (CBO) with the projections made in 2008, before the severity of the crash was recognized, the difference is $1.8tn. This is an annual figure; it implies a loss of $18tn over the course of the decade. This amount averages out to more than $54,000 for every person in the country. Other countries have seen even larger losses.

CBO is not God, so it could have been overly optimistic before the crash and is arguably too pessimistic at present. But even if we cut the number in half, we are still looking at a loss of $9tn over the course of a decade, or $27,000 per person. It is also worth noting that CBOs numbers are useful here not only because they are seen as authoritative, but they are in the centre of the profession by design. CBO raises or lowers its numbers if they are out of line with the consensus of economic forecasters.

The retrospective analyses of the overall crash have focused on the financial crisis specifically. These analyses have worked hard to convince people that seeing an impending financial crisis is an extremely difficult undertaking, but the reality is that the financial crisis was very much secondary. The overwhelming reason for the downturn and the weak recovery was the collapse of housing bubbles in the US and elsewhere that were driving growth.

It was not difficult to recognize these bubbles. House prices had risen at an unprecedented pace in the years from the mid-1990s until the crash, with no remotely plausible basis in the fundamentals of the housing market. This could be seen by a variety of measures, but most obviously from the fact that rents were still following the overall rate of inflation, as they ordinarily do. The record vacancy rate even before the crash might also have been a red flag, especially to people who believe in supply and demand determining prices.

Also, the fact that housing was driving the economy was clear from the record share of residential construction in GDP, as well as an unprecedented consumption boom driven by housing wealth. Of course these sources of demand would disappear when the bubble burst; what could anyone expect to replace six percentage points of GDP in annual demand (around $1.1tn in todays economy)?

When I tried to raise these issues in years prior to the crash, my arguments were largely laughed off by a wide range of economists. I didnt have the stature, and besides, the argument was far too simple. This is not the first time that I had a problem with making arguments that were too simple.

Back at the time of the debate over President George W Bushs social security privatization plan, I pointed out that his administrations assumed rates of return in the stock market were impossible given the current price-to-earnings (P/E) ratios in the market and the economic growth rates assumed by the social security trustees. This was an argument based on simple algebra.

Brad DeLong wanted to make this into a Brookings paper and enlisted Paul Krugman in the effort. Together they produced a paper (generously leaving me as lead author) that had an intertemporal optimization model with declining labor force growth as its key feature. (You dont have to know what an intertemporal optimization model is; just that it added complexity.)

This model had nothing to do with the underlying point (the stock market would yield the assumed returns if its price-to-earnings ratio was near its historic average of 15, rather than the P/E level near 25 that we were seeing at the time), but it was necessary to have something more complex than simple algebra to be taken seriously at Brookings.

It is easy to extend the list of failings in the economics profession. It is just now becoming accepted that our pattern of trade imposes substantial costs on large segments of the working population. This didnt require any new or novel innovations. This is a prediction of the completely mainstream Stolper-Samuelson theorem, first published three-quarters of a century ago.

And why is there so little research devoted to analysis of alternatives to patent financing of prescription drug research? The markups associated with patent protection in the sector are equivalent to tariffs of many thousand percent. Every competent economist knows that a gap that large between a government-protected price and a free-market price is a recipe for massive waste and corruption. The gap between patent-protected drug prices and free-market prices is now approaching $400bn a year in the US alone (more than 2% of GDP). This doesnt require new economic thinking; it requires economists who know introductory economics.

And how about a little accountability for economists when they mess up? There is much literature on the importance of being able to dismiss workers who do not perform their jobs well. We all know and expect that a dishwasher who keeps breaking the dishes or a custodian who cant clean the toilets loses his job.

I have suggested that economists who prescribe policies that turn out badly, or who can’t see multitrillion dollar housing bubbles coming whose collapse sinks the economy, ought to pay a price in terms of their careers. Invariably people think I am joking. When they realize I am serious, they think I am crazy or vindictive.

Leaving aside motives, let me just speak to the economics. If we have a profession in which people are rewarded with high pay and career advancement for saying the same thing as everyone else, and never face any consequences when the accepted wisdom proves to be wrong, then we should expect to see economists like the firefighters mentioned at the beginning of this piece. They aren’t qualified to do the job and our only hope is that we dont see any more major fires.

Read more: https://www.theguardian.com/business/commentisfree/2017/jul/27/how-about-a-little-accountability-for-economists-when-they-mess-up

Japan and EU expected to sign trade deal on Thursday

Shinzo Abe to meet Donald Tusk and Jean-Claude Juncker in Brussels but UK exporters likely to see no gain due to Brexit.

The European Union and Japan are on course to sign a trade deal on Thursday, after talks gained impetus in the wake of Donald Trump’s threat to put up barriers to international commerce.

Cecilia Malmstrm, the European trade commissioner, announced she had reached a political agreement with the Japanese foreign minister, Fumio Kishida: “We ironed out the few remaining differences in the EU-Japan trade negotiations, she tweeted. We now recommend to leaders to confirm this at summit.”

Japanese prime minister Shinz Abe will meet Donald Tusk and Jean-Claude Juncker, presidents of the European council and commission respectively, for a one- day summit in Brussels, before the G20 gathering in Hamburg.

The timing is no coincidence, as Germany plans to make free trade one of the summit priorities.

In a sign of high hopes, Malmstrm and Kishida exchanged Daruma dolls, armless, headless round figures associated with persistence and luck. A part of Zen Buddhist culture, people typically paint one eye when they make a wish and the second when the goal has been reached. Malmstrm and Kishida posed for the cameras, as they coloured in the second eyes on two dolls emblazoned with the EU and Japanese flags.

But officials might be looking for divine intervention to overcome the final hurdles.

Despite a likely agreement on Thursday, the sensitive subject of a court system to settle investor disputes remains open. Japan has not accepted the EUs preferred alternative to the investor-state dispute settlement (ISDS), a system for resolving trade disputes that has been criticised by unions and activists for giving too much power to corporations. Under pressure from NGOs, the EU proposed a new kind of trade court, where judges would be appointed by governments rather than disputing parties. But Tokyo has not come round to this idea.

EU sources declined to speculate on how quickly the deal could come into force, but fine-tuning and translating the legal text, as well as getting it agreed by all EU member states could take many months.

It took the EU and Canada three years to sign a final text, following the agreement in principle in October 2013, which parallels the latest EU-Japan milestone. The Canada deal almost collapsed when a Belgian region threatened to veto the treaty. Now mostly in force, the EU-Canada deal still needs to clear the final hurdle of ratification by at least 38 national and regional assemblies.

The timetable means it is likely the UK will have left the EU by the time the Japan treaty comes into force.

When negotiations began with Tokyo in 2013, Britain was one of the biggest cheerleaders. The then UK trade minister described talks as an important step towards liberalising trade between two of the worlds largest economies.

Following the Brexit vote, Theresa May has vowed to leave the customs union, meaning British exporters are unlikely to see any benefits from the EU deal.

The deal means Japan will drop tariffs on many valuable European imports, including chocolate, pasta and some types of cheese.

In return for liberalisation of Japans highly protected dairy market, Europe has compromised by agreeing to lower tariffs on Japanese imported cars, although new rules will be phased in to help European carmakers deal with the change.

Services and an array of technical standards are also covered by the treaty, which negotiators say goes far further than old-style tariff-cutting agreements.

Read more: https://www.theguardian.com/business/2017/jul/06/japan-and-eu-expected-to-sign-trade-deal-after-breakthrough-in-talks

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