No, This Time Ev­ery­thing Will not Be Dif­fer­ent

If his­tory tells us one thing, it is this: Over time, ev­ery tech­no­log­i­cal ad­vance has led to greater pros­per­ity and higher rates of em­ploy­ment. De­spite dig­i­tal­iza­tion, we’re not go­ing to run out of work.

Bulletin - - Jobs Of The Future - By To­bias Strau­mann

Why we’re not go­ing to run out of work.

“Au­to­ma­tion is not our en­emy. Our ene­mies are ig­no­rance, in­dif­fer­ence and in­er­tia,” said US Pres­i­dent Lyn­don B. John­son, ad­dress­ing his fel­low Amer­i­cans from the Cabi­net Room in the White House. “Au­to­ma­tion can be the ally of our pros­per­ity if we will just look ahead, if we will un­der­stand what is to come, and if we will set our course wisely af­ter plan­ning for the fu­ture.” This was his mes­sage in Au­gust 1964 as he signed a bill cre­at­ing the Na­tional Com­mis­sion on Tech­nol­ogy, Au­to­ma­tion and Eco­nomic Progress.

Pres­i­dent John­son was re­spond­ing to con­cerns about the con­se­quences of au­to­ma­tion. A much-quoted ar­ti­cle by two young Cana­di­ans, physi­cist and writer John J. Brown and Eric W. Leaver, an in­ven­tor of in­stru­ments, had alarmed the US public. In 1946, they ar­gued in the busi­ness jour­nal For­tune that mod­ern tech­nol­ogy would soon make it pos­si­ble to carry out in­dus­trial pro­duc­tion without the in­volve­ment of hu­man work­ers. In 1961, the weekly news mag­a­zine Time warned of the dan­ger of mass un­em­ploy­ment: “In the past, new in­dus­tries hired far more peo­ple than those they put out of busi­ness. But this is not true of many of to­day’s new in­dus­tries.”

The prophets of doom were wrong

As we know to­day, it was a false alarm. Only a short time later, fear of what au­to­ma­tion might bring had sub­sided. From the 1960s on, the econ­omy was boom­ing and there was full em­ploy­ment. Global per-capita GDP in­creased 20-fold be­tween 1965 and 2015.

Fifty years af­ter John­son’s ini­tia­tive, how­ever, anx­i­ety about tech­no­log­i­cal change has re­turned with a vengeance. “You’re fired!” read the ti­tle head­line of the Ger­man news mag­a­zine Der Spiegel. The sub­ti­tle: “How com­put­ers and ro­bots are tak­ing away our jobs.” And Jeremy Rifkin, one of the most in­flu­en­tial economists in the United States, warned of “the end of work” in a book of that ti­tle.

But now it is no longer au­to­ma­tion that is caus­ing un­ease, but dig­i­tal­iza­tion. Are the prophets of doom right this time? It’s quite pos­si­ble that dig­i­tal­iza­tion will cause a very dif­fer­ent kind of dis­rup­tion from that trig­gered by automa- tion. The fact that the doom­say­ers were wrong last time doesn’t nec­es­sar­ily mean that there is no cause for con­cern. Yet it is hard to imag­ine that ev­ery­thing will be dif­fer­ent this time. Seen in a his­tor­i­cal con­text, the ad­vent of dig­i­tal tech­nol­ogy is not an un­usu­ally dis­rup­tive de­vel­op­ment.

Fac­to­ries were much more dis­rup­tive

The tran­si­tion from man­ual to fac­tory-based pro­duc­tion two hun­dred years ago was a far more pro­found change; within a mat­ter of decades, it put an end to tra­di­tions stretch­ing back thou­sands of years. It could hardly have been more dis­rup­tive. In the mid-19th cen­tury, the steamship, the rail­roads and the tele­graph forged con­nec­tions that brought the global econ­omy to­gether. In rel­a­tive terms, they did more to bridge what were at that time stag­ger­ing dis­tances than the mo­bile tele­phones, in­ter­net and im­proved ship­ping con­tain­ers that have emerged over the last few decades. Au­to­mo­biles, elec­tric­ity and even­tu­ally air travel be­came ac­ces­si­ble to the mass mar­ket in the late 19th and early 20th cen­turies. They, too, rev­o­lu­tion­ized both busi­ness and so­ci­ety.

One might have ex­pected these ma­jor tech­no­log­i­cal break­throughs of the past to pro­duce mass un­em­ploy­ment. But sta­tis­tics pro­vide no ev­i­dence that this was the case. Data sets from Great Bri­tain, where in­dus­tri­al­iza­tion be­gan, show that the amount of work per­formed has grown steadily since 1855. Be­tween 1855 and 2016, the num­ber of jobs in­creased from 11.25 mil­lion to 31.74 mil­lion. More­over, the un­em­ploy­ment rate has been cycli­cal, rather than show­ing a longterm up­ward trend. In 2016 it was ap­prox­i­mately 5 per­cent. Only in rare pe­ri­ods did it reach dou­ble dig­its, and only when there was a se­vere re­ces­sion.

Three rea­sons for op­ti­mism

How and why has it been pos­si­ble to mit­i­gate the dis­rup­tive ef­fects of change? A look at the his­tor­i­cal ev­i­dence re­veals three mech­a­nisms: — First of all, it takes a long time for new tech­nolo­gies to have an im­pact on other in­dus­tries. Elec­tric­ity did not elim­i­nate the use of coal. As re­cently as the 1970s, coal was still one of the most im­por­tant en­ergy sources in many OECD coun­tries. Dig­i­tal­iza­tion, too, ap­pears to be a slow process. The com­puter was in­vented a long time ago, but its ef­fects are only now show­ing their full im­pact in our day-to-day lives. Books and tele­phones are in no dan­ger of dis­ap­pear­ing. On the con­trary – more books are be­ing pub­lished to­day than ever be­fore.

de­liv­er­ies has risen, be­cause the vol­ume of pack­ages shipped has dra­mat­i­cally in­creased. The on­line be­he­moth Ama­zon has a work­force of 560,000, mak­ing it one of the world’s largest em­ploy­ers. At least tem­po­rar­ily, this has cre­ated a de­mand for less skilled work­ers, which has had a com­pen­satory ef­fect. — Third, wealthy coun­tries have cre­ated in­sti­tu­tions to help al­le­vi­ate the neg­a­tive ef­fects of tech­no­log­i­cal change. At the end of the 19th cen­tury, com­pul­sory school­ing was in­tro­duced in all of the Euro­pean coun­tries and North Amer­ica. Un­em­ploy­ment in­sur­ance fol­lowed in the 20th cen­tury. And fi­nally, uni­ver­sal suf­frage has en­sured that the losers in the process of tech­no­log­i­cal change have a voice. In a democ­racy, there can be an open de­bate about new tech­nolo­gies. This in­creases the like­li­hood that em­ploy­ees and em­ploy­ers will ad­just quickly enough to the new tech­nolo­gies.

In the short term, some will lose out

There is no question, how­ever, that ev­ery tech­no­log­i­cal ad­vance pro­duces short-term losers. Many jobs dis­ap­pear. These in­clude not only low-skilled po­si­tions, but also typ­i­cal mid-level oc­cu­pa­tions in fields such as book­keep­ing and credit as­sess­ment [see ar­ti­cle on page 34]. But there is no rea­son to ex­pect that an abrupt change will trig­ger mas­sive struc­tural un­em­ploy­ment. Most work­ers will have suf­fi­cient time to find a new oc­cu­pa­tion, and the rest will have op­por­tu­ni­ties for re­train­ing. Most po­si­tions that ex­ist to­day are not in great dan­ger, be­cause the la­bor-in­ten­sive ser­vice sec­tor is the source of most jobs. The trend toward ser­vice jobs is likely to con­tinue, since the in­dus­trial sec­tor is con­tin­u­ing to boost pro­duc­tiv­ity and will be lay­ing off work­ers. We can also ex­pect that in­stead of re­plac­ing work­ers, more in­tel­li­gent ma­chines will make work more pro­duc­tive.

Real in­comes have con­tin­ued to rise

In the long term, the tech­no­log­i­cal progress of the past 200 years has al­ways boosted both em­ploy­ment and pros­per­ity. As pro­duc­tiv­ity in­creases, prices drop and wages rise. This re­sults in higher de­mand for goods and ser­vices, which in turn cre­ates more jobs. In­creased pros­per­ity cre­ates new needs and even­tu­ally new mar­kets. The Bri­tish data show that dis­pos­able an­nual in­come, ad­justed for in­fla­tion, in­creased 14fold be­tween 1760 and 2016 – de­spite in­dus­tri­al­iza­tion, the in­tro­duc­tion of mo­tor ve­hi­cles, au­to­ma­tion and dig­i­tal­iza­tion.

Struc­tural change may be un­re­lent­ing, but we have dealt with it suc­cess­fully for 200 years. There is no rea­son to be­lieve that ev­ery­thing will be dif­fer­ent this time.

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