We have to understand the effect of AI on jobs correctly
This is not correct from John Naughton:
Automation, Smith reminds us, can do three basic things. It can replace people and take their jobs. But it can also make them more productive, which can both create and destroy jobs. But automation can also create new jobs for people to do. After all, the internet automated much of the work of travel agents. But it also created jobs for web designers. The sad truth is that none of us knows how this will play out in the long run, in which, as Keynes famously observed, we are all dead.
Now whether that’s Naughton not understanding Noah Smith or that’s Noah not getting it is another thing.
Automation frees up labour to do other things, things that were not done before. The tractor gave us the NHS, for example.
There was a time when 80% of the nation was involved in growing the food to feed 100% of the nation. Something it achieved patchily, in some years didn’t achieve. Then came the tractor - a catchall for the reaping machine, combine, tractor, seed drill and on - plus ocean going steamships to transport food and on again. We currently use some 2% of the labour of the nation to feed 100% of the nation. That 78% of the nation’s labour is not involved in the production nor maintenance of tractors. Sure, sure, tractors produced new jobs for mechanics and drivers and so on. But that’s not what made us richer. Think on it - if we went from 80% growing food to 2% doing so and 78% on tractors then we’d still be using 80% of the nation’s labour to feed 100% of the nation. We’d not be richer, that is.
Automation, the new tech, might create new jobs. But that’s not the thing that makes us richer. Rather, it’s the freeing of labour from that now automated task which allows other things to be done. We could not have the amount of NHS - or educating children, or ballet, or human resources departments - we do have if we still required 80% of labour in food and tractors. That automation killed food jobs is what gave us the surplus labour to have NHS, education, ballet and human resources. The automation has made us richer by the value we apply to the NHS, education, ballet and human resources departments - admittedly a possibly variable amount there, some positive, some not.
Automation - robots, AI - makes us richer by destroying jobs and thereby making human labour available to undertake the next task on humanity’s little list of things we’d like done. It is the performance of those formerly undone tasks which is the richness provided by automation. We really do have to grasp this, it is vital to having any form of policy about what is happening.
For, of course, we do not in fact know what is the next task humanity - separately and collectively - desires to have done. We also don’t know whether the things desired can be done at all. Thirdly, we do not know whether something wanted can be done efficiently - where the value of the output is greater than the value of the inputs in their other potential uses. We’re just going to have to experiment. Try out all sorts of things. Explore that space available within the joint technological and desire envelopes.
Which, of course, requires capitalist free markets. People just trying everything and seeing what works. When one of those is found do more of it, less of those where it doesn’t work. Invention, testing, entrepreneurs, marketing, trying it out and, well, capitalist free markets. The most efficient manner known of exploring those joint technological and desire envelopes of what can be done and what people want to have done.
No, we don’t have a scooby what those things are going to be either, we just hope that it’s not more human resources.
Tim Worstall