Luddites Are Almost Always Wrong: Technology Rarely Destroys Jobs

from the it-might-change-markets dept

Two years ago, I wrote a long post about the "paradox of job creation" about politicians trying to take credit for creating jobs. As I noted, there's something of a paradox, because job creation often involves what looks like job destruction in the first place -- before people realize that those jobs can be shifted in a different direction. Case in point: in the 1940s, AT&T employed approximately 350,000 people as phone operators. AT&T had rapidly begun moving to automatic switched telephony systems a bit earlier, but it took until the late 1940s, until those really became common enough to move away from people having to pick up the phone and ask a human operator to connect them.

In the short-term tech-kills-jobs view, you could easily see this new "technology" as killing jobs. Indeed, it's reported that there are somewhere around 18,000 telephone operators in the US today. But... there are also about 100,000 call center operators and 290,000 telemarketers (and of course, in a globalized world, many of those jobs have moved overseas). But, more importantly, moving from having a human operator connect you to an automatic switched network was just an early step in leading to tremendous follow-on innovations that created all kinds of new jobs and economic growth. Automatic switched phone networks created all kinds of new business opportunities and convenience, but also eventually enabled easy access to the internet. And the internet has since created millions of new jobs (including mine!).

Two years ago, we wrote about how even President Obama had falsely argued that ATMs had diminished teller jobs and that automated check-ins at airports had hurt airline employees. The data said otherwise:
At the dawn of the self-service banking age in 1985, for example, the United States had 60,000 automated teller machines and 485,000 bank tellers. In 2002, the United States had 352,000 ATMs--and 527,000 bank tellers. ATMs notwithstanding, banks do a lot more than they used to and have a lot more branches than they used to.
Professor James Bessen has now written a similar piece for Slate, pointing out how the history of predicting job destruction from technology has almost always been totally incorrect:
At least since Karl Marx, people have been predicting that technology would create mass unemployment. However, these predictions were consistently wrong because they ignored the offsetting benefits of automation. For example, during the 19th century, machines took over tasks performed by weavers, eliminating 98 percent of the labor needed to weave a yard of cloth. But this mechanization also brought a benefit: It sharply reduced the price of cloth, so people consumed much more. Greater demand for cloth meant that the number of textile jobs quadrupled despite the automation.

Something similar is happening in quite a few occupations today. Because ATMs perform many teller transactions, fewer tellers are needed to operate a bank branch. But because it costs less to operate a branch office, banks dramatically increased the number of branches in order to reach a bigger market. More bank branches means more tellers, despite fewer tellers per branch.
Bessen does note that the type of work and skills may change -- tellers are more focused on more complex transactions rather than simple ones, just like call center employees have to help customers with problems, rather than just connect person A to person B. But is that such a bad thing?

Of course, for all this to work right, as Bessen notes, the technology has to generate much greater value to the economy. It's that value that gets disbursed more widely, creating new opportunities for jobs and economic growth. I'm almost surprised that Bessen -- who has done some of the most important research on the negative impact of patent trolling -- doesn't take the next step and point out that one way to make sure that the benefits of innovation do not get spread out over the economy is to lock them up, so that only one party receives all the benefits -- which is what something like a patent will do. We get economic growth because you can't contain the offshoot benefits of innovation. These are sometimes called externalities or spillover effects, but they're really the very fuel that improves the economy and overall opportunity -- and attempts to lock them up can often lead to those benefits not being able to spread as widely, limiting the opportunity and the potential for job growth.

Filed Under: jobs, luddites, technology


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  1. identicon
    Anonymous Coward, 3 Oct 2013 @ 3:46pm

    Re: Re: Re: Re: Re: I have to disagree with you on this one

    I am not worried.

    a) I have survival skills.
    b) I learned to make what I need.
    c) I know how to make weapons.
    d) I tried telling people every chance I get that they should take some responsibility for the things around them and be less dependent on others, you can only tell people what is right or not, is up to them to decide for themselves though.

    I will be there if governments fail, I will be there until the environment becomes toxic, native Indian Americans lived ages without anything but the land, that is all I need, heck I am even learning how to make simple crud microprocessor myself.

    But even I need others, I am not a geologist I can't see the differences in rocks and know what materials they contain, I know a lot about plant biology but there are many species I don't recognize and don't know what they are for.

    This was when I realized that all this fear of losing your job is nonsense, the stupid will go wild and probably get shot in the streets many people who didn't care to learn real skills will suffer tremendously, but sadly choices have consequences.

    I don't care about the economy, I know I will have a roof over my head and food at the very least, no matter what.
    What else should I want from life?

    That is my safety net, the knowledge to build things, the knowledge to do things, you think I am counting on money that I should give to others to take care for me?

    That is nonsense that money is long gone, my own government robbed me and others of that money a long time ago, they just don't want riots on the street that is why they don't tell anybody otherwise.

    Obamacare is all about one thing only, the creation of a new tax to replace the money that was robbed before, it probably will end the same way again, but this time is mandatory, you will be forced to give money to them again.

    Have you gone to Etsy?
    Thousands of people live on the handcraft market created there. Somehow a market for handcraft art appeared from nothing in a digital space, people will trade, people will learn to live with less and we all will learn to thrive again.


    I am old now, and have lived a lot of all that social nonsense I saw it all, over and over again, this time I am not afraid, I learned my lesson, I strived to learn how to make things.

    This is what everybody should do, we should all learn first how to make the things we need from what we have around us, and then go out and learn others stuff.

    There is this story about what Sir Isaac Newton told a guy who asked about the telescope he had, he said after being inquired where did he get that telescope:

    "Sir if I ever waited for others to do something for me I never get anything done"

    It took me decades to realize what was important in life.
    Knowledge of how to make stuff, money, economy, education everything else is secondary, the first step in anybodies life should be to learn how to make the very minimum they need to have a life without depending on anybody else.

    Go talk to an Indian on the Amazon all of them know how to make a fire, how to make clothes, how to make weapons, how to make medicine and a lot of other stuff is incredible and they didn't even had schooling they learned from others how to do it, we lost that, we let others tell us they would take care of everything and we let them do it and now we get scared that they screwed up and could go away any day now?

    I am not, I learned my lesson.
    Still I would trade with others.

    Are you afraid of riots?

    The STEN gun is a submachine gun that was made to be produced anywhere is mostly stamped parts not milled, you need pepper spay buy some hot peppers(jalapenos) and put them on oil(it gets hotter) the liquid can them be pored into a plastic bottle that you can pressurize with a one way valve that you can make or buy and a bicycle air pump, heck you can make gallons of the stuff and spray anybody who gets near you. Other plants that have toxins that are useful for protection are poison ivy and cashews beware though that the cashew toxins can be deadly if inhaled.

    Don't be afraid learn to make what you believe you will need, you sleep better at night and worry less about the future.

    Go outside take a look at what plants you have around you, some are good for fibers, others can be eaten, some have substances that are medicinal, look at what others throw out, that is raw material that can be used.

    Are you afraid people will gas you?
    Most air filters are carbon filters with a some fine thread to capture particulates, you can make a crude one by punching some holes on a plastic bottle filling it with charcoal and wrapping it in cloth.

    Are you afraid you want have food?
    Urban farming, window farming are all techniques showing how to grow food in tight spaces.

    As I said before, you can wait for others to come to their senses or you can do something about it yourself, what would you chose?

    Yes is hard, yes is annoying, yes is tedious, yes it is a lot of things that we were taught it was bad and then I remember Hun Tsu that said that the worst thing you could do to your enemy was to make him comfortable and I get over all that crap.

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