Recently a report from Future Advocacy on who will suffer the most under automation came out. The report concludes that around all the constituencies between 21.8 percent and 39.3 percent of jobs are at risk of being automated. Generally, this causes some to freak out because what is going to happen to them once their jobs are automated.
However, the fear of automation is far from new. It has been around since before the Industrial Revolution. Some of you might already have heard of Ned Ludd and the movement he inspired called the Luddites. He supposedly encouraged his followers to destroy textile machines because the machines facilitated more textiles to be produced with fewer workers. Reducing prices is terrible, right? A Luddite has later become synonymous with a person afraid of automation and technology.
Luckily as the report shows, the UK population doesn’t share this view with the Luddites and they shouldn’t.
The logic behind this movement, that is still present in today’s debate, is that in order to save jobs, you have to be as inefficient and unproductive as possible. This logic insinuates that the Luddites were after all right when they decided to destroy the textile machines.
One of the biggest problems with this axiom is that people concentrate only on the immediate effects. They focus on the fact that some people whose jobs are in danger of being automated will lose their jobs and think that they are basically done for. The narrative they subscribe to is one that describes how people moved from agriculture to manufacturing and then later on to service industry as automation happened over the last 100 years. “Where are people supposed to move to now?”, they think.
This argument is flawed because of the assumption that there are no more jobs to be created once further automation happens - the so called lump of labour. But human imagination is infinite and so are jobs. Imagine telling your granddaughter or grandson a 100 years ago that they could become an app designer or social media manager. There is no way they would have any clue about what you are talking about and once you told them they certainly wouldn’t believe you.
As David Autor notes in this article, the concerns about eg. self driving cars’ impact today is similar to those a century ago when we shifted from horses to cars. However, we shouldn’t worry because this shift will create new demands:
Similarly, just as people worry about the potential impact of self-driving vehicles today, a century ago there was much concern about the impact of the switch from horses to cars, notes Mr Autor. Horse-related jobs declined, but entirely new jobs were created in the motel and fast-food industries that arose to serve motorists and truck drivers. As those industries decline, new ones will emerge.
Thus, as Henry Hazlitt taught us in Economics in One Lesson, it’s important that we not only look at the immediate effects of automation but also look to the succeeding effects over the long run:
Joe Smith is thrown out of a job by the introduction of some new machine. “Keep your eye on Joe Smith,” these writers insist. “Never lose track of Joe Smith.” But what they then proceed to do is to keep their eyes only on Joe Smith, and to forget Tom Jones, who has just got a new job in making the new machine, and Ted Brown, who has just got a job operating one, and Daisy Miller, who can now buy a coat for half what it used to cost her. And because they think only of Joe Smith, they end by advocating reactionary and nonsensical policies.
But this doesn’t mean we shouldn’t bother to do anything to help ease the transition. We therefore ought to focus on creating a better educational system that is suited for the future awaiting us. In addition, a universal basic income or negative income tax could be introduced to help people in this transition, as the ASI have championed for many years. (You can read the report on NIT here)
Nonetheless, the great benefits that automation brings with it shouldn’t be neglected. Everyone will in the end be able to reap the fruits of several decades of innovation. Just look at your smartphones. With all the benefits these tiny phones bring with them, you are probably richer than the richest person in the beginning of the 20th century.