Friday, June 09, 2017

Are Robots Going to Steal Our Jobs? Many technologists think so, but economists aren't so easily convinced

By Ronald Bailey of Reason Magazine.

This is a fairly long article, but we certainly hear alot about this. Bailey shows that jobs have changed quite a bit since the industrial revolution. Many were destroyed (that is, workers were replaced by machines), but many new jobs were created.

And before excerpts from the Bailey article, here is a link to an article Paul Krugman wrote in Slate. He explains how, if the technology for making hot dogs improves, the laid off workers will get jobs making hot dog buns, since, if more hot dogs are being made, more buns will have to be made.

Now, excerpts from the Bailey article:
"The conventional wisdom among technologists is well-established: Robots are going to eat our jobs. But economists tend to have a different perspective.

Over the past two centuries, they point out, automation has brought us lots more jobs—and higher living standards too. "Is this time different?" the Massachusetts Institute of Technology economist David Autor said in a lecture last year. "Of course this time is different; every time is different. On numerous occasions in the last 200 years scholars and activists have raised the alarm that we are running out of work and making ourselves obsolete.…These predictions strike me as arrogant."

"We are neither headed toward a rise of the machine world nor a utopia where no one works anymore," said Michael Jones, an economist at the University of Cincinnati, last year. "Humans will still be necessary in the economy of the future, even if we can't predict what we will be doing." When the Boston University economist James Bessen analyzed computerization and employment trends in the U.S. since 1980, his study concluded that "computer use is associated with a small increase in employment on average, not major job losses."

"The economist John Maynard Keynes warned in 1930 that the "means of economising the use of labour [is] outrunning the pace at which we can find new uses for labour," resulting in the "new disease" of "technological unemployment." In 1961, Time warned: "Today's new industries have comparatively few jobs for the unskilled or semiskilled, just the class of workers whose jobs are being eliminated by automation." A 1989 study by the International Metalworkers Federation forecasted that within 30 years, as little as 2 percent of the world's current labor force "will be needed to produce all the goods necessary for total demand." That prediction has just two years left to come true."

"In a 2011 television interview, President Barack Obama worried that "a lot of businesses have learned to become much more efficient with a lot fewer workers." To illustrate his point, Obama noted, "You see it when you go to a bank and you use an ATM, you don't go to a bank teller." But the number of bank tellers working in the U.S. has not gone down. Since 1990, their ranks have increased from around 400,000 to 500,000, even as the number of ATMs rose from 100,000 to 425,000. In his 2016 study, Bessen explains that the ATMs "allowed banks to operate branch offices at lower cost; this prompted them to open many more branches, offsetting the erstwhile loss in teller jobs." Similarly, the deployment of computerized document search and analysis technologies hasn't prevented the number of paralegals from rising from around 85,000 in 1990 to 280,000 today. Bar code scanning is now ubiquitous in retail stores and groceries, yet the number of cashiers has increased to 3.2 million today, up from just over 2 million in 1990, outpacing U.S. population growth over the same period.

This illustrates why most economists are not particularly worried about the notion of widespread technological unemployment. When businesses automate to boost productivity, they can cut their prices, thus increasing the demand for their products, which in turn requires more workers. Furthermore, the lower prices allow consumers to take the money they save and spend it on other goods or services, and this increased demand creates more jobs in those other industries. New products and services create new markets and new demands, and the result is more new jobs."

"Since the advent of the smartphone just 10 years ago, for example, an "app economy" has emerged that "now supports an astounding 1.66 million jobs in the United States," Progressive Policy Institute economist Michael Mandel reports. According to the Entertainment Software Association, more than 220,000 jobs now depend on the game software industry. The IBISWorld consultancy estimates that 227,000 people work in web design, while the Biotechnology Innovation Organization says that U.S. bioscience companies employ 1.66 million people. Robert Cohen, a senior fellow at the Economic Strategy Institute, projects that business spending on cloud services will generate nearly $3 trillion more in gross domestic product and 8 million new jobs from 2015 to 2025."

""Electrification transformed businesses, the overall economy, social institutions, and individual lives to an astonishing degree—and it did so in ways that were overwhelmingly positive," Martin Ford writes in his book Rise of the Robots. But why doesn't Martin mourn all the jobs that electrification destroyed? What about the ice men? The launderers? The household help replaced by vacuum cleaners and dishwashers? The firewood providers? The candle makers?

To ask is to answer. Electricity may have killed a lot of jobs, but on balance it meant many more."

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