Technological unemployment

Technological unemployment is unemployment primarily caused by technological change. Early concern about technological unemployment was exemplified by the Luddites, textile workers who feared that automated looms would allow more productivity with fewer workers, leading to mass unemployment. But while automation did lead to textile workers being laid off, new jobs in other industries developed. Due to this shift of labor from automated industries to non-automated industries, technological unemployment has been called the Luddite fallacy.

We refer to the question: What sort of creature man’s next successor in the supremacy of the earth is likely to be. We have often heard this debated; but it appears to us that we are ourselves creating our own successors; we are daily adding to the beauty and delicacy of their physical organisation; we are daily giving them greater power and supplying by all sorts of ingenious contrivances that self-regulating, self-acting power which will be to them what intellect has been to the human race. In the course of ages we shall find ourselves the inferior race.
...
Day by day, however, the machines are gaining ground upon us; day by day we are becoming more subservient to them; more men are daily bound down as slaves to tend them, more men are daily devoting the energies of their whole lives to the development of mechanical life. The upshot is simply a question of time, but that the time will come when the machines will hold the real supremacy over the world and its inhabitants is what no person of a truly philosophic mind can for a moment question. ~ Samuel Butler

Suppose a clothing manufacturer learns of a machine that will make men’s and women’s overcoats for half as much labor as previously. He installs the machines and drops half his labor force.
This looks at first glance like a clear loss of employment. But the machine itself required labor to make it; so here, as one offset, are jobs that would not otherwise have existed. The manufacturer, how ever, would have adopted the machine only if it had either made better suits for half as much labor, or had made the same kind of suits at a smaller cost. If we assume the latter, we cannot assume that the amount of labor to make the machines was as great in terms of pay rolls as the amount of labor that the clothing manufacturer hopes to save in the long run by adopting the machine; otherwise there would have been no economy, and he would not have adopted it. ~ Henry Hazlitt

Quotes

• We refer to the question: What sort of creature man’s next successor in the supremacy of the earth is likely to be. We have often heard this debated; but it appears to us that we are ourselves creating our own successors; we are daily adding to the beauty and delicacy of their physical organisation; we are daily giving them greater power and supplying by all sorts of ingenious contrivances that self-regulating, self-acting power which will be to them what intellect has been to the human race. In the course of ages we shall find ourselves the inferior race.

...

Day by day, however, the machines are gaining ground upon us; day by day we are becoming more subservient to them; more men are daily bound down as slaves to tend them, more men are daily devoting the energies of their whole lives to the development of mechanical life. The upshot is simply a question of time, but that the time will come when the machines will hold the real supremacy over the world and its inhabitants is what no person of a truly philosophic mind can for a moment question.

• Samuel Butler Darwin among the Machines

• But you have one thing that may save you, and that is your youth. This is your great strength. It is also why I hate and fear you. Hear me out. It has been said that children are our future. But does that not also mean that we are their past? You are here to replace us. I don't understand why we're here helping and honoring them. You do not see union workers holding benefits for robots.
  • Stephen Colbert Knox College commencement address (3 June 2006)

• Among the most viable of all economic delusions is the belief that machines on net balance create unemployment. Destroyed a thousand times, it has risen a thousand times out of its own ashes as hardy and vigorous as ever. Whenever there is long-continued mass unemployment, machines get the blame anew. This fallacy is still the basis of many labor union practices. The public tolerates these practices because it either believes at bottom that the unions are right, or is too confused to see just why they are wrong. The belief that machines cause unemployment, when held with any logical consistency, leads to preposterous conclusions. Not only must we be causing unemployment with every technological improvement we make today, but primitive man must have started causing it with the first efforts he made to save himself from needless toil and sweat.
  • Henry Hazlitt, Economics in One Lesson (1946), Ch. 7. The Curse of Machinery

• Suppose a clothing manufacturer learns of a machine that will make men’s and women’s overcoats for half as much labor as previously. He installs the machines and drops half his labor force.
  This looks at first glance like a clear loss of employment. But the machine itself required labor to make it; so here, as one offset, are jobs that would not otherwise have existed. The manufacturer, how ever, would have adopted the machine only if it had either made better suits for half as much labor, or had made the same kind of suits at a smaller cost. If we assume the latter, we cannot assume that the amount of labor to make the machines was as great in terms of pay rolls as the amount of labor that the clothing manufacturer hopes to save in the long run by adopting the machine; otherwise there would have been no economy, and he would not have adopted it.
  So there is still a net loss of employment to be accounted for. But we should at least keep in mind the real possibility that even the first effect of the introduction of labor-saving machinery may be to increase employment on net balance; because it is usually only in the long run that the clothing manufacturer expects to save money by adopting the machine: it may take several years for the machine to “pay for itself.”
  After the machine has produced economies sufficient to offset its cost, the clothing manufacturer has more profits than before. (We shall assume that he merely sells his coats for the same price as his competitors, and makes no effort to undersell them.) At this point, it may seem, labor has suffered a net loss of employment, while it is only the manufacturer, the capitalist, who has gained. But it is precisely out of these extra profits that the subsequent social gains must come. The manufacturer must use these extra profits in at least one of three ways, and possibly he will use part of them in all three: (1) he will use the extra profits to expand his operations by buying more machines to make more coats; or (2) he will invest the extra profits in some other industry; or (3) he will spend the extra profits on increasing his own consumption. Whichever of these three courses he takes, he will increase employment.
  • Henry Hazlitt, Economics in One Lesson (1946), Ch. 7. The Curse of Machinery

• In brief, on net balance, machines, technological improvements, economies and efficiency do not throw men out of work.
  • Henry Hazlitt, Economics in One Lesson (1946), Ch. 7. The Curse of Machinery

Dialogue

• Obama: [M]ost people aren’t spending a lot of time right now worrying about singularity—they are worrying about “Well, is my job going to be replaced by a machine?”
  I tend to be on the optimistic side—historically we’ve absorbed new technologies, and people find that new jobs are created, they migrate, and our standards of living generally go up. I do think that we may be in a slightly different period now, simply because of the pervasive applicability of AI and other technologies. High-skill folks do very well in these systems. They can leverage their talents, they can interface with machines to extend their reach, their sales, their products and services.
  Low-wage, low-skill individuals become more and more redundant, and their jobs may not be replaced, but wages are suppressed. And if we are going to successfully manage this transition, we are going to have to have a societal conversation about how we manage this. How are we training and ensuring the economy is inclusive if, in fact, we are producing more than ever, but more and more of it is going to a small group at the top? How do we make sure that folks have a living income? And what does this mean in terms of us supporting things like the arts or culture or making sure our veterans are getting cared for? The social compact has to accommodate these new technologies, and our economic models have to accommodate them.
• Ito: It’s actually nonintuitive which jobs get displaced, because I would bet if you had a computer that understood the medical system, was very good at diagnostics and such, the nurse or the pharmacist is less likely than the doctor to be replaced—they are less expensive. There are actually very high-level jobs, things like lawyers or auditors, that might disappear. Whereas a lot of the service businesses, the arts, and occupations that computers aren’t well suited for won’t be replaced. I don’t know what you think about universal basic income, but as we start to see people getting displaced there’s also this idea that we can look at other models—like academia or the arts, where people have a purpose that isn’t tied directly to money. I think one of the problems is that there’s this general notion of, how can you be smart if you don’t have any money? In academia, I see a lot of smart people without money.

Obama: You’re exactly right, and that’s what I mean by redesigning the social compact. Now, whether a universal income is the right model—is it gonna be accepted by a broad base of people?—that’s a debate that we’ll be having over the next 10 or 20 years. You’re also right that the jobs that are going be displaced by AI are not just low-skill service jobs; they might be high-skill jobs but ones that are repeatable and that computers can do. What is indisputable, though, is that as AI gets further incorporated, and the society potentially gets wealthier, the link between production and distribution, how much you work and how much you make, gets further and further attenuated—the computers are doing a lot of the work. As a consequence, we have to make some tougher decisions. We underpay teachers, despite the fact that it’s a really hard job and a really hard thing for a computer to do well. So for us to reexamine what we value, what we are collectively willing to pay for—whether it’s teachers, nurses, caregivers, moms or dads who stay at home, artists, all the things that are incredibly valuable to us right now but don’t rank high on the pay totem pole—that’s a conversation we need to begin to have.

• Joi Ito and Barack Obama, “BARACK OBAMA, NEURAL NETS, SELF-DRIVING CARS, AND THE FUTURE OF THE WORLD”, Scott Dadish, Wired, (Nov 2016)

See also

• Bailouts
• Capitalism
• Democracy
• Disability
• Economic inequality
• Greed
• Living wage
• Negative income tax
• Plutocracy
• Poverty
• Poverty reduction
• Prosperity theology
• Redistribution of income and wealth
• Refusal of work
• Social Democracy
• Sharing
• Social inequality
• Social justice
• Taxation
• Technology
• Unemployment
• Universal basic income