Past technological waves have created the same hopes and the same worries over job loss.
Robotics and artificial intelligence (AI) have fed two kinds of dreams, the first of the hopeful pleasant sort, and the other a nightmare. The first tells of great abundance, convenience and wealth. The other warns of job loss and widespread unemployment, among both workers and the managerial class. Both have some validity, but only up to a point. AI, like most technological advances before it, will offer society great advances in prosperity and productivity, though they will emerge at a slower pace than the enthusiasts predict. It will also take some jobs, but contrary to much commentary on the subject, it will not lead to mass unemployment. It will instead likely create more new jobs than it destroys and will create occupations that didn’t exist before.
Popular commentary in the United States on this matter has given both dreams lavish attention. Describing AI and modern robotics as different from any previous technological waves, much analysis gushes about the prospects for immense convenience and great wealth. Some pieces describe a future of aristocratic-like lifestyles, except with robot instead of human servants. At the same time, commentary worries about the tendency for the new technology to eliminate jobs. A January 2018 Gallup poll concluded: “Economists agree” AI is the “single biggest threat to future job growth.” Such thinking, especially within the tech community, goes on to envision the rise of a large class of permanently unemployed. It almost always concludes that the nation must care for these people and protect social cohesion by providing a universal basic income (UBI) to all, financing it with a tax on the vast wealth created by AI. Depending on who is speaking, the tax would fall either on robots themselves, their users, or their producers (but seldom the person calling for the tax.)
Before framing policy around such thinking, all should note that America has heard this song before. Past technological waves have created the same hopes and the same worries over job loss. They have all also included calls for society to provide for a universal basic income or something much like it. In the 1930s, a group called the Industrial Workers of the World (IWW) published a report blaming the widespread unemployment of the time on the use of machinery in production. Its analysis noted how in the prior twenty years the introduction of machinery into factories had cut the labor hours needed to produce an automobile by three quarters and the labor required to create a ton of steel by more than eighty-five percent. It further noted how in the prior seventy-five years, the labor needed to produce the wheat crop of the United States had fallen to a mere hundredth of what it had been. IWW thinkers concluded that those who had benefited from these surges in productivity should provide incomes to the workers displaced in the process.
If the IWW looks ridiculous today, it is only because the Great Depression gave way to a great prosperity that employed millions more. However, new calls of this kind arose again, this time amid great prosperity. In the opening years of the 1960s a large group of U.S. academics, including several economists and scientific Nobel laureates issued a report that identified the “new kinds of automation” as having “broken” the once-secure “link between jobs and incomes.” Concerns along with these lines were in fact widespread. At about the same time as this public-spirited report appeared, American President John F. Kennedy warned how automation, among other things, pointed to a future haunted by the “dark menace of industrial dislocation, increasing unemployment, and deepening poverty.” With this in mind, he created an Office of Automation and Manpower in the Labor Department. It would address “the major domestic challenge of the Sixties: to maintain full employment at a time when automation, of course, is replacing man.” He followed up by recommending that Congress fund “readjustment allowances” for “workers displaced by technological change.” Later in that decade, U.S. President Lyndon B. Johnson, also worried over the employment effects of technology, brought together a panel of experts. They concluded that the government should create “a guaranteed minimum income for each family.”
Apart from the changes political correctness has imposed on language, such concerns and conclusions sound precisely like those uttered today. And no doubt they seemed just as compelling at the time. Yet, the widespread unemployment forecast at each technological wave failed to become a lasting part of America’s social landscape. To be sure, each period of innovation destroyed jobs. The railroads cost canal builders and workers their occupations. The rise of the automobile not only killed the work of buggy makers but also millions of jobs and acres of land dedicated to the breeding, training, shipping, selling, and stabling the millions of horses then needed in the economy. The invention of shipping containers in the 1950s put millions of longshoremen out of work. But at the same time, new jobs emerged from these new technologies themselves and the tremendous wealth fostered by them.
Despite the presence of concerns at each stage, jobs and wealth creation has typified each wave of technological innovation, probably going back to the invention of the wheel and the breeding of animals for draft and transportation. The statistics, sadly, do not go back as far as the wheel, but the ones we do have by economic historians verify the benefits of each advancement. For all the technological advancement over the centuries, economies, except for brief interludes, have always reliably provided work for some ninety-five percent of the population that wants to work. If technology indeed destroyed jobs, that number would have fallen over time.
Instead, often the new technology itself creates additional employment. The application of the spinning jenny and machine loom in eighteenth and early nineteenth century Britain put hand weavers and others out of work. But by creating a much more profitable trade on textiles, the inventions brought about such an expansion in the industry that it ultimately employed more people than previously, including a more significant part of the nation’s workforce as well. More recently, the advancement of automatic teller machines (ATM) made everyday banking so much more efficient, the industry employed higher numbers of men and women, including the tellers that people feared would wind up on the unemployment line.
Of greater significance than the employment question is how much wealth created by each technological advance. To be sure, each wave creates a class of super-wealthy from those lucky or smart enough to have made themselves a part of it. The great American railroad barons of the nineteenth century stand as examples, as do today’s computer-based tech barons. No doubt AI will create its own class of this sort. But the technology also drives the general economy, creating new demands for products and services of all kinds that in turn create new jobs. This job-producing leverage is evident in a simple thought experiment. Imagine if AI could bring the growth rate of labor productivity in America from the present pace of about one percent a year up to the two to three percent pace averaged in the 1960s, 70s, and 80s. If that were to happen, the overall U.S. economy would expand at something close to 3.5 percent a year instead of the recent two percent pace. Over the next ten years, that difference would produce $3.6 trillion additional annual national product than otherwise, a huge cumulative addition.
Of course, each U.S. generation, though it has access to this history, worries that its technology is somehow different. The response is understandable. People can see the jobs the new technology will destroy a lot clearer than the jobs it will create, especially since some of the new jobs have yet to be even imagined. For instance, when containers put American longshoremen out of work in the late 1950s and early 1960s, it would have taken a bold forecaster indeed to predict that containers would be a good thing. In fact, those containers would foster a 2,000 percent increase in world trade in just five years and create more jobs for higher-paid, better-trained workers in the industry and beyond it. Furthermore, in the 1980s when widespread use of word processing drove out U.S. typists, who were mostly women, the number of women in the workforce still increased, as did the proportion of women in paid employment. The natural inability to see the sources of growth shows clearly, if rather comically, in how the 1975 report of the American Council of Economic Advisors (incidentally authored by Alan Greenspan) did not once use the word “computer.”
There is no doubt that robotics and AI will cause dislocation and hardship for some. In this case, the nature of the new technology will extend the pain to occupations once thought immune (which may be why the fears have become unusually intense among U.S. journalists and bureaucrats.) There is every reason to seek programs and funds that can retrain and retool such people for other work. Though, as always, it is difficult to identify what that future work will involve (and a fool’s game to try to identify it). The good thing is that the evidence of history, a small part of which this article reviews, and the logic of economic growth suggests that a jobless future is the least likely of outcomes and that the argument for a UBI misses that point.
Mr. Milton Ezrati is a contributing editor at the National Interest, an affiliate of the Center for the Study of Human Capital at the University at Buffalo (SUNY), and chief economist for Vested, the New York-based communications firm. His latest book is Thirty Tomorrows: The Next Three Decades of Globalization, Demographics, and How We Will Live.