Neo-Luddite idea that automation causes high unemployment rates has been disproved throughout history.
With unemployment rates so high for so long, one explanation making the rounds is that "the robots are taking our jobs." This neo-Luddite, anti-technology narrative argues that high productivity driven by increasingly powerful IT-enabled "machines" is the main cause of U.S. labor market problems, and accelerating technological change will only make those problems worse.
If technology enables the same amount of work to be done with fewer people, the argument goes, then it must be bad for employment. More sophisticated variants of this thesis further claim that accelerating technological change has created too much churn in labor markets, and robots are now storming the last few bastions of scarce human abilities.
This tale is not new. The original British Luddites rose up in the early 1800s to oppose mechanization of the textile industry and went so far as to destroy looms that were replacing workers. In the two centuries since, whenever unemployment rates have risen there have been some who blamed the machines. Many even argued that we were heading toward mass permanent unemployment.
What is different today is how widespread the neo-Luddite view has become and how well-received it is in Western society. When the leading proponents of this view get an amiable hearing on the TV news magazine 60 Minutes, you know that something has changed.
Fortunately for workers and for those who understand the potential of new technologies, these ideas are essentially misguided speculation. They fly in the face of years of economic data as well as current trends.
They all fall into what economists call the "Lump of Labor" fallacy, the idea that there's a limited amount of labor to be done. In reality, labor markets aren't fixed. If jobs in one firm or industry are reduced, they're replaced by jobs in other areas of the economy. This is why we did not see massive unemployment as agriculture mechanized in the early 20th century -- the workforce shifted to other professions.
In addition, focusing on job loss creates a distorted view of the process of technological change. First, many businesses actually increase employment as they increase productivity rather than lay workers off, because productivity gains let them cut costs, in turn enabling them to increase sales. Second, savings from increased productivity are recycled back into the economy in the form of lower prices and/or higher wages that create demand that, in turn, creates even more jobs.
The neo-Luddite, anti-robot case is clearly refuted by the data and by scholarly research. Macroeconomic studies have shown convincingly that technology improvements neither decrease the rate of people working in an economy nor raise the unemployment rate. Comprehensive analyses from sources as varied as the World Bank, the International Labor Organization and the Federal Reserve Bank of San Francisco have noted that technological change doesn't play an important role in determining employment in the long run. If anything, productivity may actually reduce unemployment in the medium term.
The potential for job losses in the future is often overstated as well, with grandiose claims about human obsolescence and the end of labor as we know it. A more realistic view of the economy shows why these claims miss the mark.
One reason is that our economy is complex, with a broad range of industries and occupations, some amenable at a particular time to automation and many others not. Another reason is that technological change, no matter how advanced, doesn't happen overnight -- in fact, current productivity increases are trending downward. But the main reason is that human wants are close to infinite. We need look no further than the fact that most people would love to win the Powerball lottery so they can buy a mansion and luxury car. And as long as that's true, those wants will require labor to fill them (even if that labor is eventually supplemented by 22nd century robots).
The erroneous view that machines are the problem and not the solution goes against the uniquely American grain of faith in the desirability and inevitability of progress. And it threatens to sap the American spirit of its relentless and aggressive support for innovation and technological development.
It is time to consign neo-Ludditism and its particular refrain that "technology costs jobs" once and for all to the dustbin of history. Robots, automation, machines and productivity are key enablers of human progress and absolutely no threat to overall employment. As such, economic policy should put the pedal to the metal, at every possible opportunity, for faster technological improvement, better use of that technology in the workplace, and higher productivity.
. We've got a management crisis right now, and we've also got an engagement crisis. Could the two be linked? Tune in for the next installment of IT Life Radio, Wednesday May 20th at 3PM ET to find out.