Automation at Goldman, The Computer takes out four people

Today, nearly 45 percent of trading is done electronically, according to Coalition, a U.K. firm that tracks the industry.

Pay:

Average compensation for staff in sales, trading, and research at the 12 largest global investment banks, of which Goldman is one, is $500,000 in salary and bonus, according to Coalition. Seventy-five percent of Wall Street compensation goes to these highly paid “front end” employees, says Amrit Shahani, head of research at Coalition… Investment bankers working on corporate mergers and acquisitions at large banks like Goldman make on average $700,000 a year, according to Coalition, and in a good year they can earn far more.

Automating those $700,000+ meat-sacks:

Goldman Sachs has already begun to automate currency trading, and has found consistently that four traders can be replaced by one computer engineer, Chavez said at the Harvard conference. Some 9,000 people, about one-third of Goldman’s staff, are computer engineers.

Finding the things to automate:

Though those “rainmakers” won’t be replaced entirely, Goldman has already mapped 146 distinct steps taken in any initial public offering of stock, and many are “begging to be automated,” he said.

To be all double-turns-out about the grim automation stuff, in theory, this could mean hiring more programmers and people who support those robots, bringing down those big chunks of cash from “rainmakers” and spreading it down to “lower” grade staff. Of, you know, the bank can just keep that money and trickle it up to execs and share-holders.

Source: As Goldman Embraces Automation, Even the Masters of the Universe Are Threatened

More on “grim” automation – Notebook

https://pixabay.com/en/rusty-robot-osnago-italy-sculpture-1505297/

A few weeks back my book review of two “the robots are taking over” came out over on The New Stack. Here’s some responses, and also some highlights from a McKinsey piece on automation.

Don’t call it “automation”

From John Allspaw:

There is much more to this topic. Nick Carr’s book, The Glass Cage, has a different perspective. The ramifications of new technology (don’t call it automation) are notoriously difficult to predict, and what we think are forgone conclusions (unemployment of truck drivers even though the tech for self-driving cars needs to see much more diversity of conditions before it can get to the 99%+ accuracy) are not.

Lisanne Bainbridge in her seminal 1983 paper outlines what is still true today.

From that paper:

This paper suggests that the increased interest in human factors among engineers reflects the irony that the more advanced a control system is, so the more crucial may be the contribution of the human operator.

When things go wrong, humans are needed:

To take over and stabilize the process requires manual control skills, to diagnose the fault as a basis for shut down or recovery requires cognitive skills.

But their skills may have deteriorated:

Unfortunately, physical skills deteriorate when they are not used, particularly the refinements of gain and timing. This means that a formerly experienced operator who has been monitoring an automated process may now be an inexperienced one. If he takes over he may set the process into oscillation. He may have to wait for feedback, rather than controlling by open-loop, and it will be difficult for him to interpret whether the feedback shows that there is something wrong with the system or more simply that he has misjudged his control action.

There’s a good case made for not only the need for humans, but to keep humans fully trained and involved in the process to handle errors states.

Hiring not abating

Vinnie, the author of one of the books I reviewed, left a comment on the review, noting:

For the book, I interviewed practitioners in 50 different work settings – accounting, advertising, manufacturing, garbage collection, wineries etc. Each one of them told me where automation is maturing, where it is not, how expensive it is etc. The litmus test to me is are they stopping the hiring of human talent – and I heard NO over and over again even for jobs for which automation tech has been available for decades – UPC scanners in groceries, ATMs in banking, kiosks and bunch of other tech in postal service. So, instead of panicking about catastrophic job losses we should be taking a more gradualist approach and moving people who do repeated tasks all day long and move them into more creative, dexterous work or moving them to other jobs.

I think Avent’s worry is that the approach won’t be gradual and that, as a society, we won’t be able to change norms, laws, and “work” over fast enough.

McKinsey

As more context, check out this overview of their own study and analysis from a 2015 McKinsey Quarterly article:

The jobs don’t disappear, they change:

Our results to date suggest, first and foremost, that a focus on occupations is misleading. Very few occupations will be automated in their entirety in the near or medium term. Rather, certain activities are more likely to be automated, requiring entire business processes to be transformed, and jobs performed by people to be redefined, much like the bank teller’s job was redefined with the advent of ATMs.

Further:

our research suggests that as many as 45 percent of the activities individuals are paid to perform can be automated by adapting currently demonstrated technologies… fewer than 5 percent of occupations can be entirely automated using current technology. However, about 60 percent of occupations could have 30 percent or more of their constituent activities automated.

Most work is boring:

Capabilities such as creativity and sensing emotions are core to the human experience and also difficult to automate. The amount of time that workers spend on activities requiring these capabilities, though, appears to be surprisingly low. Just 4 percent of the work activities across the US economy require creativity at a median human level of performance. Similarly, only 29 percent of work activities require a median human level of performance in sensing emotion.

So, as Vinnie also suggests, you can automate all that stuff and have people focus on the “creative” things, e.g.:

Financial advisors, for example, might spend less time analyzing clients’ financial situations, and more time understanding their needs and explaining creative options. Interior designers could spend less time taking measurements, developing illustrations, and ordering materials, and more time developing innovative design concepts based on clients’ desires.

Book Review: Automation & tech ethics, book review

These two books go well together because the first describes how automation is lowering the need for labor, leading, likely, to less jobs, while the second provides a compendium of examples of such software-driven labor change.
Vinnie’s book has the optimism of a technologist, while Avent’s is much more fraught. Both accurately describe how IT is optimizing and replacing “analog” labor and businesses, leaving the core problem of devaluing human labor, perhaps to the point of eliminating millions of jobs, permanently. Vinnie’s optimism is the usual believe that we can figure it out, mostly by being more humane in our politics and safety nets, but also in the belief that new problems and jobs will come about. Avent, on the other hand, offers little in the way of solace.
As the review in his magazine, The Economist, put it: “I found the virtuosity with which Mr Avent knocked down possible solutions disquieting.” Aside from actually reading the book, the lecture Avent gave at LSE is good stuff too.
Check out the full review.

Even the burger-flippers are threatened by digital transformation.

One current attempt at machine-made burgers comes from a San Francisco startup called Momentum Machines, whose founders have estimated that their burger-making robot will save the average restaurant $135,000 a year in wages. Momentum says their machine can also customize burgers to include different blends of meat and special cheeses, neither of which the AMFare could handle. “Our device isn’t meant to make employees more efficient,” co-founder Alexandros Vardakostas has said. “It’s meant to completely obviate them.”

Also, one of the better headlines you’ll see today: “America has been trying to automate cheeseburgers for more than 50 years”

Link

Creativity: not much needed at your job

Capabilities such as creativity and sensing emotions are core to the human experience and also difficult to automate. The amount of time that workers spend on activities requiring these capabilities, though, appears to be surprisingly low. Just 4 percent of the work activities across the US economy require creativity at a median human level of performance. Similarly, only 29 percent of work activities require a median human level of performance in sensing emotion.

Four fundamentals of workplace automation

Chef Automate: the big stack o’ stuff from Chef

Chef stack diagram

The idea behind this consolidation is to give organizations system-wide insight across all their applications and their supporting environments, be they in the cloud or within private data centers.

Also, some momentum updates:

More than 80 percent of Chef’s revenue now comes from enterprise deployments, consisting of more than 900 commercial customers.

See also Tim Anderson’s coverage at The Register.

Source: Chef Rolls all of its IT Management Ingredients into One Package, Chef Automate

Reflecting on the OpenStack Kilo Summit and Looking Forward to Liberty

“Puppet alone provides the basis for the majority of OpenStack deployments, at 56 percent. Puppet plus deployment tools that utilize Puppet (e.g., Mirantis Fuel, Red Hat OpenStack Platform, PackStack) provide the basis for 72 percent of all production deployments.”

Reflecting on the OpenStack Kilo Summit and Looking Forward to Liberty

Digging behind the headlines about factory robots and self-driving cars, wearable computers and digitized medicine, Carr explores the hidden costs of allowing software to take charge of our jobs and our lives. Drawing on history and philosophy, poetry and science, he makes a compelling case that the dominant Silicon Valley ethic is sapping our skills and narrowing our horizons.

Blurb from Nicholas Carr’s upcoming book, The Glass Cage