The Business Insider on Technological Unemployment

Business Insider recently wrote a broad article on technological unemployment entitled “The Future of Jobs.” Some highlights –

John Maynard Keynes warned about technological unemployment back in 1930 in an essay entitled “Economic Possibilities for our Grandchildren.” However, his concerns largely were not realized – unemployment went down, and real wages went us.

[wages] more than tripled from 1875 to 1975. Industrialisation did not end up eliminating the need for human workers. On the contrary, it created employment opportunities sufficient to soak up the 20th century’s exploding population.

Technological unemployment works best when the kinks have been worked out of the process.

Experimentation with different techniques and business models requires flexibility, which is one critical advantage of a human worker. Yet over time, as best practices are worked out and then codified, it becomes easier to break production down into routine components, then automate those components as technology allows.

The implementation of automation is highly dependent on labor costs:

When Nissan produces cars in Japan, he notes, it relies heavily on robots. At plants in India, by contrast, the firm relies more heavily on cheap local labour.

Technological unemployment might not result in less employment as much as _under_employment.

The productivity gains from future automation will be real, even if they mostly accrue to the owners of the machines. Some will be spent on goods and services – golf instructors, household help and so on – and most of the rest invested in firms that are seeking to expand and presumably hire more labour. Though inequality could soar in such a world, unemployment would not necessarily spike.

[…] society may find itself sorely tested if, as seems possible, growth and innovation deliver handsome gains to the skilled, while the rest cling to dwindling employment opportunities at stagnant wages.