For the last two centuries people have been warning that automation will cause
long-term unemployment, and they have been wrong every time, and hopefully they
will continue to be wrong. But the horse analogy used in the video (and also
by Gregory Clark in A Farewell to
Alms)
is what convinced me that things might indeed be different this time.
Something that occurs to me when reading this comment that I’m now considering, that isn’t necessarily related to this comment directly:
Automation doesn’t actually have to be a sole cause of long term unemployment problems for it to be problematic. If Automation just slows the rate at which reemployment occurs after something else (perhaps a recession) causes the unemployment problem, that would still be problematic.
For instance, if we don’t recover to the pre-recession peak of employment before we have a second recession, and we don’t recover to the pre-second recession peak of employment before we have a third recession.… That would be a downward spiral in employment with large economic effects, and every single one of the sudden downward drops could be caused by recessions, with the automation just hampering reemployment.
I’m kind of surprised I didn’t think of something like this before, because it sounds much more accurate than my previous thinking. Thank you for helping me think about this.
I’d say it’s at least clear that so far automation has
caused little to no long-term unemployment. (Again, the
industrial revolution started a couple centuries ago and
yet there are still jobs.) Generally what happens is:
New automation is introduced that allows widgets to be
made at lower labor costs.
Many people in the widget industry lose their jobs.
(Which is no fun for them.)
Widgets are now cheaper, which means people who buy
widgets can now afford more of them (somewhat
ameliorating the unemployment in the widget industry) or
spend their extra money on other things (meaning more
employment is available in other industries for the
former widget makers).
Edit: Take agriculture as an example.
Wikipedia
says that about a billion people (1/7 of the world’s
population and “over 1⁄3 of the available work force”)
currently work in agriculture. That article doesn’t give
versions of this worldwide number for previous points in
history, but it does say, “During the 16th century in
Europe, for example, between 55 and 75 percent of the
population was engaged in agriculture, depending on the
country. By the 19th century in Europe, this had dropped to
between 35 and 65 percent. In the same countries today, the
figure is less than 10%.”
spend their extra money on other things (meaning more employment is available in other industries for the former widget makers)
That doesn’t follow. It may mean that more jobs are available in other industries but these jobs require skills that the former widget makers don’t have, thus creating an imbalance where one area of the economy has reduced unemployment and one has increased unemployment.
Furthermore, it doesn’t mean that the number of jobs is balanced out, but the amount of money. It is entirely possible that three jobs worth $X are lost among widget makers and one job worth $3X is created in the other area of the economy.
The Industrial Revolution led to the creation of new jobs that were still low skill jobs. Because they were low skill jobs, people displaced from other jobs would be able to take the new jobs. The fact that the new jobs were low skill jobs was good luck; it’s not a general characteristic of jobs that are created by technological advance, and there’s no reason to expect that other changes should also create jobs that are sufficiently low-skill that the displaced workers can take them.
The Industrial Revolution led to the creation of new jobs that were still low skill jobs.
Um, I don’t think that’s true. I am not sure what do you mean by “low skill”, though. To clarify, let me make my statement stronger: up till now technological progress did not lead to massive unemployment. Do you think that new jobs created during, say, the last 30 years are “still low skill jobs”?
I don’t know a single example of technological progress starting from early metallurgy (bronze, etc.) which led to massive unemployment. Do you really think it’s all just good luck?
I don’t know a single example of technological progress starting from early metallurgy (bronze, etc.) which led to massive unemployment. Do you really think it’s all just good luck?
It’s good luck in the sense that it’s accidental and not essential to technological progress. It’s not good luck in the sense of being based on a random element that could have turned out another way.
I suggest that earlier forms of technological progress shift the available jobs in a way which increases the level of skill needed for the new jobs (in comparison to the old jobs) by much less than later forms of technological progress do.
For the last two centuries people have been warning that automation will cause long-term unemployment, and they have been wrong every time, and hopefully they will continue to be wrong. But the horse analogy used in the video (and also by Gregory Clark in A Farewell to Alms) is what convinced me that things might indeed be different this time.
But is it clear that automation hasn’t caused long-term unemployment?
Something that occurs to me when reading this comment that I’m now considering, that isn’t necessarily related to this comment directly:
Automation doesn’t actually have to be a sole cause of long term unemployment problems for it to be problematic. If Automation just slows the rate at which reemployment occurs after something else (perhaps a recession) causes the unemployment problem, that would still be problematic.
For instance, if we don’t recover to the pre-recession peak of employment before we have a second recession, and we don’t recover to the pre-second recession peak of employment before we have a third recession.… That would be a downward spiral in employment with large economic effects, and every single one of the sudden downward drops could be caused by recessions, with the automation just hampering reemployment.
I’m kind of surprised I didn’t think of something like this before, because it sounds much more accurate than my previous thinking. Thank you for helping me think about this.
I’d say it’s at least clear that so far automation has caused little to no long-term unemployment. (Again, the industrial revolution started a couple centuries ago and yet there are still jobs.) Generally what happens is:
New automation is introduced that allows widgets to be made at lower labor costs.
Many people in the widget industry lose their jobs. (Which is no fun for them.)
Widgets are now cheaper, which means people who buy widgets can now afford more of them (somewhat ameliorating the unemployment in the widget industry) or spend their extra money on other things (meaning more employment is available in other industries for the former widget makers).
Edit: Take agriculture as an example. Wikipedia says that about a billion people (1/7 of the world’s population and “over 1⁄3 of the available work force”) currently work in agriculture. That article doesn’t give versions of this worldwide number for previous points in history, but it does say, “During the 16th century in Europe, for example, between 55 and 75 percent of the population was engaged in agriculture, depending on the country. By the 19th century in Europe, this had dropped to between 35 and 65 percent. In the same countries today, the figure is less than 10%.”
That doesn’t follow. It may mean that more jobs are available in other industries but these jobs require skills that the former widget makers don’t have, thus creating an imbalance where one area of the economy has reduced unemployment and one has increased unemployment.
Furthermore, it doesn’t mean that the number of jobs is balanced out, but the amount of money. It is entirely possible that three jobs worth $X are lost among widget makers and one job worth $3X is created in the other area of the economy.
It looks like you’re arguing against empirical reality. The Industrial Revolution did happen. It did not lead to massive unemployment.
The Industrial Revolution led to the creation of new jobs that were still low skill jobs. Because they were low skill jobs, people displaced from other jobs would be able to take the new jobs. The fact that the new jobs were low skill jobs was good luck; it’s not a general characteristic of jobs that are created by technological advance, and there’s no reason to expect that other changes should also create jobs that are sufficiently low-skill that the displaced workers can take them.
Um, I don’t think that’s true. I am not sure what do you mean by “low skill”, though. To clarify, let me make my statement stronger: up till now technological progress did not lead to massive unemployment. Do you think that new jobs created during, say, the last 30 years are “still low skill jobs”?
I don’t know a single example of technological progress starting from early metallurgy (bronze, etc.) which led to massive unemployment. Do you really think it’s all just good luck?
It’s good luck in the sense that it’s accidental and not essential to technological progress. It’s not good luck in the sense of being based on a random element that could have turned out another way.
I suggest that earlier forms of technological progress shift the available jobs in a way which increases the level of skill needed for the new jobs (in comparison to the old jobs) by much less than later forms of technological progress do.