A few links from around the web on the impact that technology is having on the job market and economy:
Ford’s basic thesis (laid out in his book “The Lights in the Tunnel”) is that machines are now getting so advanced that they’re going to be better than human beings at doing everything and thus there will be no jobs. He also thinks this is a very bad thing, a view which I think is terribly strange.
In fact, I’ve never said there will be “no jobs.” I’ve only said that technology may ultimately eliminate the bulk of routine jobs. But that will nonetheless result in major problems. History suggests that the 25% unemployment the United States experienced during the Great Depression is probably pretty close to the limit of what a democratic society can withstand.
I also have never said that advancing technology, or job automation, is “a bad thing.” In fact, I agree that it is a great thing. I just believe we need to reform our economic system so it will be a great thing for everyone — and not just a tiny elite. Suggesting such reforms was really the whole point of my book, “The Lights in the Tunnel.” We cannot escape the fact that a great many people are best equipped to do routine things and will have great difficulty moving to non-routine/creative areas, even if those jobs are available. If we assume a bell curve distribution, then by definition, 50% of the workforce is average or below average in terms of capability. At the same time, technology is also encroaching on even the high skill jobs held by people with above average capability. Ultimately these trends will demand a response.
Later Worstall says this:
Machines are about to get so good that humans just won’t have anything to do at all. We won’t need to sow, weed or reap, sew or in fact anything. Not only will food and clothes be made by machine, the machines that make the machines that make the food and clothes (and houses and cars and computer games and….) will be made by machines.
Humans will therefore have no jobs, no jobs at all. Ford thinks this is appalling as therefore human beings will have no incomes. I think it sounds like a rather wondrous world actually, even without humans having any incomes.
The problem is that in the world as it exists today, you do not get to consume without an income. I think Tim is saying that all those machines will make production so efficient — and prices so low — that even people with very low incomes will still be able to consume. There are a couple of problems here. First if your income is ZERO, then it doesn’t matter how low prices are: you are out of luck. And a great many people will be in that situation unless we dramatically improve our social safety net.
The second issue is that efficient machines will not drive down many of the fixed costs that take up most household budgets. Powerful robots are not going to lower the principal on your mortgage. Nor are they likely to drive down food prices much, as agriculture is already highly mechanized. We can dream that technology will dramatically lower health care costs, and maybe it will happen someday — but probably not until after you lose your job.
In general, if prices fall in one area — say food production or computers — that has historically been a good thing. But if wages and prices fall across the board then that is DEFLATION. And a big problem with deflation is that while wages, prices and asset values may fall — debts do not. In time, people will default or debt service will leave them with little discretionary income to spend on other things — creating the risk of a deflationary spiral. I’ve written more about this in a previous post.
Marshall Brain has started posting new items to his Robotic Nation Evidence Blog.
Occupy Silicon Valley?
CBS MoneyWatch: Is Silicon Valley fueling unemployment?