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A Techno-Optimist Take on Automation and Jobs
Reason writer Ronald Bailey outlines a strong case that fears about technological unemployment are overblown. For instance: He adds needed context to the recent finding by MIT economist Daron Acemoglu and Boston University economist Pascual Restrepo that each additional industrial robot in the United States results in 5.6 American workers losing their jobs.
But even taking the high-end estimate, job loss due to robots was has been just 670,000 since 1990 while “last year some 62.5 million Americans were hired in new jobs, while 60.1 million either quit or were laid off from old ones, according the Bureau of Labor Statistics.” I would add that total nonfarm employment over that span has increased by nearly 40 million.
And Bailey on the basic economics that shock stories often miss:
When businesses automate to boost productivity, they can cut their prices, thus increasing the demand for their products, which in turn requires more workers. Furthermore, the lower prices allow consumers to take the money they save and spend it on other goods or services, and this increased demand creates more jobs in those other industries. New products and services create new markets and new demands, and the result is more new jobs.
Pessimists also fail to appreciate our inability to imagine what future jobs look like, a failing that stems from our inability to imagine future technology and its uses. Bailey cites research from economist Michael Mandel that in the decade since the advent of the smartphone, the “app economy” now supports nearly two million jobs.
Let me end with this bit from Bailey that quotes economist David Autor:
Imagine a time-traveling economist from our day meeting with Thomas Edison, Henry Ford, and John D. Rockefeller at the turn of the 20th century. She informs these titans that in 2017, only 14 percent of American workers will be employed in agriculture, mining, construction, and manufacturing, down from around 70 percent in 1900. Then the economist asks the trio, “What do you think the other 56 percent of workers are going to do?”
They wouldn’t know the answer. And as we look ahead now to the end of the 21st century, we can’t predict what jobs workers will be doing then either. But that’s no reason to assume those jobs won’t exist.
“I can’t tell you what people are going to do for work 100 years from now,” Autor said last year, “but the future doesn’t hinge on my imagination.”
(For more on the issues surrounding automation, a relatively recent piece from the Richmond Fed is worth reading. It looks at things through the lens of how driverless vehicles might affect truck drivers.)
Published in Economics, Science & Technology
Prediction:
20 years from now people will be saying, “Why don’t we have driverless cars?”
I say this because 50 years ago, people were predicting flying cars. In both cases, there seems to be some sort of reality distortion field enveloping the difficulties. In the instance of flying cars there are a wide range of practical engineering problems people just sort of presumed would be solved. Regarding driverless cars, there is a massive data collection and coordination problem smack dead in the middle of the road. Plus integration with existing transportation. Which by the way is why some of the futurists predict conventional cars and trucks will need to be outlawed. It won’t be the insurance companies who ask for it, it will be the Elon Musks of the world who will demand it.
We can’t let those drivers get in the way of the future.
Also, this: https://fee.org/articles/automation-is-not-different-this-time-and-thats-a-good-thing
By the way, I’m pretty much an optimist when it comes to automation, I’ve seen a dramatic change in my own field because of it. I just happen to think there is a lot of overselling going on by some people and unreflective acceptance by many.
On the face of it, the immediate objection is that if automation reduces human jobs in the first place, then lower prices won’t bring more human jobs, but more automation. The increased productivity would only lessen the number of new workers needed to satisfy any higher demand.
Again, as often happens in these discussions, the problem is that automation puts the cart before the horse. In the past, the evolution of new industries caused old industries to become obsolete, and new jobs supplanted the old jobs. The new jobs already existed before the old jobs became obsolete. But in this case, automation isn’t creating new industries, and new jobs aren’t being created (or enough of them anyway). Instead, automation is simply eliminating the need for the same old jobs, without having new jobs to replace them with.
I simply do not worry about automation and job loss. On the other hand unless we dismantle the administrative state that slows adjustment, new business formation, spawns still more new technologies, extracts excess rents from all players, etc. trade and new technology will continue to impose severe strains on our political economic system. We have always had major discontinuities produced by new technologies, but we adjusted with blistering speed because we could. That ability is being systematically assassinated by the administrative state and it’s both parties.
There are many reasons to doubt that the jobs apocalypse is coming. There are the economic reasons that James mentioned above, but there’s also a gross misunderstanding of the complexity of modern jobs, and how hard it is to automate them. This gross simplification of the workplace is common among people in government, academia and high up in business.
I work in this field. I have seen many automation attempts fail. Heck, I’ve seen attempts to merely digitize paper processes fail. These attempts usually involve high-level planning and simply fail when they meet the reality of the job. Usually people find out that the process they want to digitize is not the process that actually exists. Even local managers do not always understand exactly how their workforce does their job at a micro level. We rely on human judgement and feedback from the bottom to the top to smooth over the failures of planning. This is judgement and feedback that robots are not capable of giving us for a very, very long time if ever.
Economists, head office managers, politicians… they see everything from 10,000 feet and think they understand it. They come up with grand schemes and policies based on this superficial understanding, and then can’t understand why they fail.
We should stop listening to their prognostications (which have a track record about as accurate as throwing darts at a dartboard) and start listening to engineers, factory foremen, small business people, and the workers themselves.
As a modest proposal, the next time a pundit or a politician wants to declare that industry ‘x’ is going to die from automation, they should first be required to spend say, a week actually doing that job. Then let’s hear from them about how easy it is to automate.
Consider the simple example of digitizing and sharing health records. We still haven’t managed it, and we’ve been trying for two decades. What would seem like a relatively simple problem from a distance (certainly simpler than, say, replacing all truck drivers with automation), turns out to be hellishly complex, and attempts to do it have led down the road to unintended consequences and bad outcomes, which is the usual result when some smart person thinks they can ‘tune’ a complex system and make it do what they want.
Certainly there will be jobs lost to technology. The Luddites were smashing looms hundreds of years ago. What there is no evidence for are the kind of widespread, permanent job losses without replacement that are now being predicted.
Helmuth von Moltke was a German general famous for coining the phrase, “No battle plan survives first contact with the enemy.” This understanding was a result of his actual experience in warfare and seeing first hand what happens when a carefully constructed plan is tested against reality. In the same spirit, it’s a truism that no central plan ever survived first contact with the market place. The only way we make it work is by having humans in the loop at the top AND the bottom, so feedback can get to the top and modifications to the plan can be iterated until something emerges that actually works.
A world of planners and robots and no one else is a world that cannot function efficiently, or perhaps at all.