Get ready to hear a lot more about technological unemployment. The theory holds that automation, especially of the digital variety, is happening more quickly than entrepreneurs and human capital can adjust. And it’s why, says Andrew McAfee, co-author of Race Against the Machines, a boom in US manufacturing wouldn’t bring a boom in job creation:
– Manufacturing employment has been on a steady downward trend in the U.S. since 1980 (it increased some after the end of the Great Recession, but this boost appears to be leveling out).
– Manufacturing jobs have also been trending downward in Japan and Germany since at least 1990 and, as I wrote earlier, in China since 1996.
– Manufacturing employment decline is a global phenomenon. As a Bloomberg story summarized: “Some 22 million manufacturing jobs were lost globally between 1995 and 2002 as industrial output soared 30 percent. … It seems that devilish productivity is wreaking havoc with jobs both at home and abroad.”
Nor does McAfree buy the theory that even if manufacturing employment declines because of automation, the drop will be offset elsewhere in the economy. If goods can be produced more cheaply, it will free up purchasing power for other things, right?
Fair enough, but what if those other companies are also automating? One of the most striking phenomena of recent years is the encroachment of automation into tasks, skills and abilities that used to belong to people alone. As we document in Race Against the Machine, this includes driving cars, responding accurately to natural language questions, understanding and producing human speech, writing prose, reviewing documents and many others. Some combination of these will be valuable in every industry.
Previous waves of automation, like the mechanization of agriculture and the advent of electric power to factories, have not resulted in large-scale unemployment or impoverishment of the average worker. But the historical pattern isn’t giving me a lot of comfort these days, simply because we’ve never before seen automation encroach so broadly and deeply, while also improving so quickly at the same time.