Jean Tirole Examines the Future of Work

By TAP Staff Blogger

Posted on November 8, 2017


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In his new book, Economics for the Common Good, Economics Nobel Laureate Jean Tirole shares his insights on how scientific knowledge can guide economic policies and help us to understand the world we live in. The book covers a broad array of topics, including global warming, unemployment, the Euro crisis, the digital revolution, innovation, and the proper balance between the free market and regulation.

 

Pulling from topics in his book specific to the future of labor and the impact of technology on industries, Professor Tirole wrote an article to address the question, “What is the future of work?” He discusses the gig economy versus standard salaried employment, and he examines the global repercussions of automation and artificial intelligence. In “The Future of Work Might Not Be So Bleak,” Professor Tirole explains why “technology won't eliminate good jobs, but it could exacerbate inequality.”

 

Below are a few excerpts from “The Future of Work Might Not Be So Bleak.”

 

Technology, of course, is already making independent work a lot easier. It puts workers into contact with customers and helps them run a back office. More importantly, it allows individuals to build and promote their reputations at low cost. Customers used to rely on a taxi company’s reputation, or choose a washing machine by the manufacturer’s brand. Now, each worker has a brand: On Uber, customers can reject drivers based on their personal ratings. A firm’s collective reputation, with the concomitant control of its employees’ behavior, is becoming gradually less important.

 

In short, I believe that salaried employment will not disappear, although it might become less prevalent over time.

 

But what about artificial intelligence? Not a day passes without the media fretting about the mass unemployment that will ensue as robots take over for humans. Many jobs involving routine (and thus codifiable) tasks have been eliminated: banking transactions are digitized, checks are processed by optical readers, call centers use software to shorten the length of conversations between customer and employee, or even replace humans with bots.

 

Computers have also made great advances in induction, which starts with specific facts and works toward a general law. For example, algorithms are capable of predicting the U.S. Supreme Court’s decisions about patents as well as any legal experts. Similar techniques are enabling automated facial recognition, voice recognition, medical diagnosis, and other tasks that previously only humans could perform.

 

So humans and computers face different challenges. Computers are much faster and more reliable when processing logical and predictable tasks. Thanks to machine learning, they can increasingly cope with unforeseen situations, provided they have enough data to recognize the structure of the problem. On the other hand, the human brain is more flexible: A five-year-old child can handle some problems better than any computer. So the people best equipped to succeed in the new world will be those who have acquired abstract knowledge that helps them adapt to their environment, while those with only simple knowledge preparing them for routine tasks are most in danger of being replaced.

 

This is why education is crucial. If we don’t have a system that gives everyone a chance to gain the necessary skills, differences in education and family background will lead to even greater inequality.

 

This article is adapted from Economics for the Common Good, to be published in English next week by Princeton University Press. (It was published in French in 2016.)

 

More from Professor Tirole:
Professor Tirole recently joined the Wall Street Journal Money Beat podcast to discuss his new book, Economics for the Common Good, and to share his insights on how the economy can be used to address social and political issues. Listen to “Nobel Economist Tirole on Changing Economy For Good.”

 

 

Jean Tirole, winner of the 2014 Nobel Prize in economics, is chairman of the Toulouse School of Economics and of the Institute for Advanced Study in Toulouse. His research focuses on industrial organization, regulation, competition policy, antitrust, corporate finance, and game theory.

 


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