On Technology Eliminating Jobs: ‘This Time It Might Be Different’
June 12th, 2013Via: MIT Technology Review:
Given his calm and reasoned academic demeanor, it is easy to miss just how provocative Erik Brynjolfsson’s contention really is. Brynjolfsson, a professor at the MIT Sloan School of Management, and his collaborator and coauthor Andrew McAfee have been arguing for the last year and a half that impressive advances in computer technology—from improved industrial robotics to automated translation services—are largely behind the sluggish employment growth of the last 10 to 15 years. Even more ominous for workers, the MIT academics foresee dismal prospects for many types of jobs as these powerful new technologies are increasingly adopted not only in manufacturing, clerical, and retail work but in professions such as law, financial services, education, and medicine.
That robots, automation, and software can replace people might seem obvious to anyone who’s worked in automotive manufacturing or as a travel agent. But Brynjolfsson and McAfee’s claim is more troubling and controversial. They believe that rapid technological change has been destroying jobs faster than it is creating them, contributing to the stagnation of median income and the growth of inequality in the United States. And, they suspect, something similar is happening in other technologically advanced countries.
Perhaps the most damning piece of evidence, according to Brynjolfsson, is a chart that only an economist could love. In economics, productivity—the amount of economic value created for a given unit of input, such as an hour of labor—is a crucial indicator of growth and wealth creation. It is a measure of progress. On the chart Brynjolfsson likes to show, separate lines represent productivity and total employment in the United States. For years after World War II, the two lines closely tracked each other, with increases in jobs corresponding to increases in productivity. The pattern is clear: as businesses generated more value from their workers, the country as a whole became richer, which fueled more economic activity and created even more jobs. Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation. Brynjolfsson and McAfee call it the “great decoupling.” And Brynjolfsson says he is confident that technology is behind both the healthy growth in productivity and the weak growth in jobs.
It’s a startling assertion because it threatens the faith that many economists place in technological progress. Brynjolfsson and McAfee still believe that technology boosts productivity and makes societies wealthier, but they think that it can also have a dark side: technological progress is eliminating the need for many types of jobs and leaving the typical worker worse off than before. Brynjolfsson can point to a second chart indicating that median income is failing to rise even as the gross domestic product soars. “It’s the great paradox of our era,” he says. “Productivity is at record levels, innovation has never been faster, and yet at the same time, we have a falling median income and we have fewer jobs. People are falling behind because technology is advancing so fast and our skills and organizations aren’t keeping up.”
The nerdy cheerleaders of silicone valley and the business elite will pooh-pooh the idea of new technology eliminating the need for workers because they are the ones that benefit immensely from productivity gains but the average worker doesn’t see much benefit. So what if the product is cheaper to make and costs less for the consumer to buy if the consumer is put out of work of work and doesn’t have the money to buy the cheaper product anyways. The purpose behind all this new technology is to eliminate the need to hire humans in the first place not just to make their jobs easier to do. It is not just one or a few industries effected like it was in the past it is all industries today that are eliminating jobs through technology. They don’t call it labour saving technology for nothing. You couple this with the fact the world’s population has doubled since the 1970’s but the jobs created have not and you have recipe for high unemployment and sluggish growth. Unemployed people don’t have the money to buy that cheaper product made by a robot. This is only going to get worse as the technology advances eliminates more jobs than it creates and the world’s population continues to boom and the productivity gains go to the top 5%. At some point the world’s economy will crash as this is not sustainable. You cannot put almost all your customers out of work and still expect them to buy from you. The rich are small in numbers and cannot make up for the dive in sales that logically follow when most consumers end up having little income because they are unemployed or underemployed in one of those crummy low paying survival jobs that are not worth automating.