Technological Innovation Is Nothing to FearTags Free MarketsCalculation and Knowledge
In recent decades, increasingly rapid innovation in medicine, education, means of transport, data storage, and communication have contributed to a general improvement in living standards. Still, from time to time this successful narrative is hit hard by noisy worries about the “job-destroying effect of automation” — a notion that remains lodged in minds of a lot of people.
A survey by Pew Research Internet finds Americans are roughly twice as likely to express worry (72 percent) than enthusiasm (33 pecent) about a future in which innovations are capable of doing tasks that are currently done by humans. Why are these fears so strong and persistent? Why are so many people afraid of technology?
We could point out several reasons, among which are self-interested authors (who are selling dystopian books) or even the (always present) political-ideological purpose — along with its secondary aims. But let’s focus here on two causes that maybe are the most important ones: (1) misinformation and (2) the fear of being left behind.
We must cast light upon these points to shake off the wide pessimism (prevalent nowadays) and replace it with realism about the role technology plays in our lives, notably in the labor market.
War Against the Machines
The idea of an eternal battle between men and machines is deeply embedded in the popular imagination through popular films like I, Robot or The Terminator, in which machines attempt to take over the world.
But even presumed lesser threats — such as the idea machines will put us out our jobs — are well ingrained in the minds of many.
Nor is this anything new. The Luddites, for example, were artisans whose manual skills were being replaced by mechanization in the early Industrial Revolution and who decided to fight back by smashing machines. In 1753, for example, they targeted John Kay, inventor of the “flying shuttle” (one of the first significant improvements in the mechanization of weaving), and burned his house down. It’s little wonder their movement has become synonymous with resistance to technological change.
Were Luddites able to stop technological innovation? Certainly not. Moreover, today we know that the brilliant inventions of that time (mass production machines) lowered costs and prices, enabling working class consumers to purchase things that before only aristocrats had access and that today we take for granted (sugar, tea, coffee, watches, porcelain, glass, curtains, colorful clothes, etc.).
That’s a good thing. But how about jobs lost? Sometimes a single machine can replace dozens of workers. So aren't machines a threat? Those who think so today certainly aren't alone. In 1930, John Maynard Keyes wrote an essay suggesting that there would be mass unemployment following automation of manufacturing.
Not surprisingly, Keynes was proven quite wrong. Unemployment has not become endemic to the modern economy even though mechanization has meant manufacturing dropped from 32 percent of the workforce in 1910 to 24 percent in 1970 to 8.5 percent in 2018. Jobs created in new areas replaced the jobs in manufacturing.
Moreover, as the twentieth century progressed, the job force grew to the point where female participation in the workforce grew to levels never before seen.
What conclusion can we draw from this? If technology eliminated some jobs, it clearly also brought some new ones into being. Keynes seems to have forgotten (among other things) that the stock of work in the economy is not fixed: where a door is closed, others (bigger ones) are opened.
Technology Changes the Way We Work
In 1901, the population in England and Wales was 32.5 million. 200,000 people were engaged in washing clothes. Then, electricity and indoor plumbing came up, technologies that made possible the automatic washing machine. The drudgery of hand washing became a thing of the past. By 2011, with a population of 56.1 million, just 35,000 people worked in the sector, most in commercial laundries.
It seems that we lost a lot of jobs, doesn’t it? But that’s not really what happened. We need to examine data sources carefully for better answers. The quoted figures above, for example, came from a study by economists at the consultancy Deloitte that indicates that innovation does not simply take away our jobs; instead, it fundamentally change the labor market structure.
Now, we cannot deny that, in some sectors, technology costs jobs (especially the low-skilled ones). However, in a vast number of cases, new technologies merely ease our workload or allow us not to do what we do not want to do anymore (something dull, dirty or dangerous, in general). So, the previous question is whether the jobs lost are really jobs we would want to hold on to.
Allow me to illustrate. A paper from Office for National Statistics shows that in 1841 around 20 percent of workers were concentrated in agriculture and fishing (dull and dirty and dangerous jobs). This number has declined to less than 1 percent by 2011. Statistics indicate that today robotics makes up 29 percent of welding applications. Welding requires professionals to work both with chemical reactions (hazardous fumes and ultraviolet light) and extremely hot temperatures. This makes it a particularly good fit for robotics when it comes to safety — when operating welding robots, humans stay behind safety fences or interlocking doors. This is just one example of how robots could supplement our roles by making them less dangerous than before.
Indeed, the last centuries have been witnessing a profound shift in the labor market, which is switching from muscle power activities to caregiving professions. In 1871, muscle power occupations (including agricultural workers, cleaners, domestic servants, routine factory operatives, construction laborers and miners) represented 23.7 percent of total employment; by 2011 this number has decreased to 8.3 percent. In the same period, caring professionals (encompassing health and teaching professionals, welfare and care home workers) leaped from 1.1 to 12.2 percent.
Nor does innovation necessarily lead to declines in wages. As reported by Brookings in 2011:
Real hourly compensation increased from an average $9.88 per hour in 1947 to $35.44 per hour today. These improvements in compensation and the rising living standards they afford reflect innovations that have made businesses and people more productive.