Economics, U.S. Economy

Will machines finally steal all our jobs?

In an important essay over at The American, Arnold Kling looks at how technology is affecting the labor market. (This was also the subject of the recent ebook Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy). His thesis is that structural change is an important factor in the current rate of high unemployment. The economy is in a state of transition, in which the middle-class jobs that emerged after World War II have begun to decline.

In fact, I believe that the Great Depression of the 1930s can also be interpreted in part as an economic transition. The impact of the internal combustion engine and the small electric motor on farming and manufacturing reduced the value of uneducated laborers. … The structural-transition interpretation of the unemployment problem of the 1930s would be that the demand for uneducated workers in the United States had fallen, but the supply remained high.

What took place after the Second World War was not the revival of a 1920s economy, with its small farming units, urban manufacturing, and plurality of laborers. Instead, the 1950s saw the creation of a new suburban economy, with a plurality of white-collar workers. With an expanded transportation and communications infrastructure, businesses needed telephone operators, shipping clerks, and similar occupations.

And now America is in the middle of another transition:

As noted earlier, the proportion of clerical workers in the economy peaked in 1980. By that date, computers and advanced communications equipment had already begun to affect telephone operations and banking. The rise of the personal computer and the Internet has widened the impact of these technologies to include nearly every business and industry. … These trends serve to limit the availability of well-defined jobs. If a job can be characterized by a precise set of instructions, then that job is a candidate to be automated or outsourced to modestly educated workers in developing countries.

How will things play out? Kling lays out two scenarios. One, people get a lot smarter, whether through better education (unlikely) or smart drugs (possibly). The future looks bright for “disciplined, self-directed learners with creative gifts.” Or this:

I think it is possible that technocrats will be able to come up with programs that offer decent work and reasonable incomes for workers with modest skills. However, I have more faith in a process in which technocrats must compete for charitable donations than a process in which they compete for government power.

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