Technology and the Future of Work

While globalization is often blamed for loss of jobs in the developed world, much of the blame must go to technological advances. Reaction against new technologies has occurred for over two hundred years, since the early stages of industrialization. The process of “creative destruction,” whereby new technology brings about the demise of existing practices, typically results in the loss of jobs.

Over time this process has replaced not only routine manual jobs, but also more technical jobs. Complex computer programs can scan legal casework or interpret radiological images. How this continuing trend may play out is the subject of many books. Four recent books present widely varying views of what is possible. One says we can invent our way to a high, sustainable standard of living for everyone on our planet. A second says there is no way out of our current condition; we have reached the limits of the earth’s resources. A third says there is a path to a high, sustainable standard of living, but it has some serious consequences that need to be addressed. Let’s review the first three in order.

Abundance was published in February 2012, written by Peter H. Diamandis and Steven Kotler. The authors leave no doubt as to what can be accomplished. In their words,

Humanity is now entering a period of radical transformation in which technology has the potential to significantly raise basic standards of living for every man, woman, and child on the planet. Within a generation, we will be able to provide goods and services, once reserved for the wealthy few, to any and all who need them.

The exponential growth of technologies, such as biotechnology, networks and sensors, robotics, and nanotechnology will make this dream possible. Medical diagnostic labs-on-a-chip, point-of-use water purification, and self-contained toilets that produce no waste and generate excess electricity, are among the technologies waiting to serve. Steering and speeding innovation can be facilitated by offering incentive prizes. Diamandis is in a position to know; he is the chairman and CEO of the X Prize.

In The End of Growth, published in 2011, author Richard Heinberg states up-front, “The central assertion of this book is both simple and startling: Economic growth as we have known it is over and done with.” (Italics by author.) Heinberg writes that depletion of natural resources including fossil fuels and minerals, and damage to the environment lead to snowballing costs. The recent economic crisis signals that on-going economic expansion is beyond the ability of our broken monetary, banking, and investment systems to service government and private debt.

The third book, The Lights in the Tunnel by Martin Ford and published in 2009, also finds technology capable of not only providing for mankind’s needs, but doing so with little or no work on the part of human laborers for many tasks. Computers capable of performing increasingly complex jobs will impact even highly educated workers, leaving recent graduates and older college-educated workers unemployed. However, as greater portions of the workforce become unnecessary, the number of potential consumers also decreases, and business owners are left with falling demand. With automation reducing the cost of production, Ford proposes that a portion of the increased profits be taxed. While business owners will undoubtedly resist the idea, the prospect of falling demand will convince them otherwise. The tax would be distributed to the unemployed, who would be incentivized to perform services that benefit society. As Ford sees it, “Consumption, rather than production, will eventually have to become the primary economic contribution made by the bulk of average people.”

A fourth book published in 2014 was written by Erik Brynjolfsson and Andrew McAfee. Its title, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, reveals that the authors’ conclusions are similar to those in Abundance. They cite three forces to support their conclusions:

1. Sustained exponential improvement in most aspects of computing
2. Extraordinarily large of amounts of digitized information
3. Combination and recombination of existing technologies to provide nearly limitless possibilities for new pairings of data and computational powers

But, like the author of The Lights in the Tunnel, Brynjolfsson and McAfee recognize that technology can also create unemployment. They state, “For now the best way to tackle our labor challenges is to grow the economy.” Their advice: Improve education, support startups, support scientists, upgrade infrastructure, and tax wisely.”

Also like The Lights in the Tunnel, the authors discuss solutions to fill the gap for the unemployed and the underemployed: Basic Income – a base amount guaranteed for workers, regardless of whether there are jobs for all or not; Negative Income Tax – government income provided to workers whose income is below what is taxed; and Peer Economy – matching people to work opportunities on an ad hoc basis through Internet-based service businesses.

Is the unusually low U.S. labor force participation rate a precursor of a decreasing requirement for workers? If so, will owners of the means of production see fit to address the trend?

There is a story told about Walter Reuther, president of United Auto Workers, taking a tour of a new Ford engine plant that was largely automated. A company official on the tour asked Reuther how he thought the union was going to collect dues from the robots. Reuther responded with a question, asking: “How are you going to get them to buy Fords?”

Recent post