Will technological unemployment impoverish us?

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The future is frequently portrayed in modern science fiction films as a place of enormous inequality, where a small elite enjoys cutting-edge technology and a life of leisure, while the masses toil away in poverty in a polluted world devoid of resources. But science fiction frequently reflects our current issues rather than offering a vision of the future. The same is true of worries about inequality and anxieties about technological unemployment.

Contradictions abound in the dystopian worlds portrayed in these films. The world’s resources are frequently exhausted, but there is advanced technology that can produce cheap, limitless energy. Many times, this technology renders human labor obsolete, but images of the masses toiling in the fields for a living persist. The masses live short, brutal lives without even the comforts and healthcare of the twentieth century, while the elite have access to unmatched health, longevity, and synthetic enhancements.

Of course there will be conflict and injustice because this is Hollywood. The director is not particularly worried about inconsistencies. But people’s thinking continues to contain these logical contradictions. They obstruct our ability to see the future of our world clearly.

Technology generates income.

The past, not the future, is where we can find examples of a small elite living a lavish lifestyle while the huddled masses toil in poverty. Pre-industrial societies were distinguished by their absence of technology. This resulted in inefficiency, forcing the majority of the population to work hard and for a long time doing manual labor, with little to show for it other than poverty and survival.

Today’s world is characterized by a heavy reliance on technology. Humans can now accomplish more with less effort thanks to technology. It increases effectiveness, lowers costs, and generates wealth.

However, whenever new technology reduces work, it inevitably results in job losses for workers. After all, getting machines to do work so we don’t have to is the whole point of technology. This is obviously a problem in the short term for those who have lost their jobs. The effect is ultimately beneficial for everyone in society, not just those who lost their jobs, but these broader, longer-term gains are harder to see than the immediate suffering of the recently unemployed. If we only pay attention to the issues, we might come to believe that technology only benefits a select few and causes widespread poverty. Contrary to popular belief, technology actually benefits the majority and has only temporary negative effects on the economy.

It has long been known that technological advancement and unemployment go hand in hand. According to Adam Smith’s statement in his classic work on economics, Wealth of Nations, published in 1776, “a workman unacquainted with the use of machinery employed in pin-making could scarce make one pin a day, and certainly could not make twenty, but with the use of this machinery he can make 4,800 pins a day.” In other words, for every pin worker who kept his job, 4,799 pin makers lost their jobs as a result of the invention of pin-making machinery. 4,799 unemployed men are lining up, frantically looking for work. The advantage to society as a whole of cutting the price of making pins by a factor of 4,800 is less obvious. Living expenses are decreased, and the money saved is spent on other goods and services, resulting in the creation of new jobs in different industries. It should be clear that shifting jobs from one industry to another will have a net positive impact on society as a whole and will not result in widespread permanent unemployment.

An outstanding illustration of this process in action is the history of agriculture in the United States. According to the US Census, agricultural laborers made up half of all employees in 1870, and agricultural technology was characterized by manual labor and horse-drawn equipment. Less than 5% of all workers were employed in agriculture by 1950, and tractors and electrical equipment had largely replaced horses. Today, less than 1% of all wage and salary workers in the US are employed as hired farmworkers. It is too obvious to mention that this hasn’t resulted in a significant increase in unemployment or the plight of everyday workers; on the contrary.

Over 40% of the average American family’s income was spent on food in 1900. Currently, it is under 15%. As a result of agricultural technology advancement, food is less expensive, the money saved on food is spent on other purchases, and average Americans are significantly wealthier.

Is this time any different?

Martin Ford, one of the most significant writers on technological unemployment in recent years, appears to accept that technological progress generates wealth but argues that things are different this time around in his books The Lights in the Tunnel and Rise of the Robots. Ford’s main claim is that a sizable portion of the labor force could be rendered permanently obsolete by technology for the first time in human history.

Martin Ford’s claim that “This time is different” seems difficult to support given how the agricultural revolution made half of all US jobs obsolete and how the industrial revolution had effects of a comparable magnitude. Economics’ tenets remain constant. Ford might have reached the same conclusion if he had been writing in 1800, when hundreds of men were being replaced by steam-powered machinery, or in 1900, when tractors and other new technology had eliminated 30% of all American jobs in 50 years. Eleanor Roosevelt expressed a similar sentiment in her 1945 essay, which began: “We have reached a point today where labor-saving devices are good only when they do not throw the worker out of his job.”

The phrase “This time is different” has been used frequently in economics throughout the ages, but the evidence neither supports it now nor in the past with regard to human obsolescence.

Ford points to the United States’ stagnant wage growth since the 1970s as proof. Yet if we want to look at real wealth, wages aren’t always a useful statistic. Inflation, immigration, and other factors influence wages. Instead, if we take another look at the percentage of income that is spent on food, we will see that this percentage has been steadily declining throughout the twentieth century and did not stop in 1970. Food expenses as a percentage of personal income in the US were 13.9% in 1970, 13.2% in 1980, 11.5% in 1990, 9.8% in 2000, and 9.6% in 2010. The percentage of families with cars is another sign of American wealth. In 1969, 32% of American households had two or more cars, with 80% having at least one. 92% of households owned a car by 2009, and 58% of those owned two or more. This is a tale of steadily increasing wealth, not declining wealth, as might be predicted given the rapid advancements in technology over the previous 40 years.

speed of change

It is undeniably true that technology is advancing at a faster rate than ever before and that this trend will continue. As a result, both the long-term advantages and the short-term issues are growing. In their daily lives, most people can most easily see the immediate issues, particularly if they or someone they know experiences job loss.

Fortunately, we are in a good position to support the transitions needed when jobs are rendered obsolete by technology in the modern world. The working classes in Victorian London were left to fend for themselves as machines took their jobs. The 1930s saw little in the way of social assistance for those who had lost their jobs as a result of the Great Depression. Now, due almost entirely to the increased wealth that technology has given us, society has the means to offer transitional help to those who need it.


Perhaps our real concern isn’t unemployment, but inequality. The fear is not that robots will do our work for us (which would be a good thing), but that unemployment will cut off our means of earning a living. In short, we are conditioned to see ourselves as workers, under the power of a wealthy elite. A popular narrative tells us that inequality is growing, and that capitalism, globalization and technology are the driving forces for this.

I beg to differ.

Technological efficiency creates wealth and raises living standards for the poorest in society as well as the rich – perhaps for the poorest most of all. It always has done and it always will. After all, in ancient times it was not Kings and Queens who had to carry water from the well, or plough the fields, but ordinary people. Mechanization benefits those who do the work.

Kings and Queens have always enjoyed leisure time and luxuries – now ordinary people do too. Our ancestors toiled in the field, and starved whenever droughts or famine hit. Now you and I are well fed (I presume), and have leisure time to read and write articles such as this.

An ordinary American born in 1900, worked an average of 60 hours a week and had a life expectancy of 47 years, whereas a modern American works 40 hours a week and can expect to live to 78.

The fact is that wealth becomes more available to more people as time goes on. Augustus Caesar (63BC – 14AD) ruled over an empire that accounted for 30% of the world’s economy, but he didn’t have access to even basic healthcare. Genghis Khan (1162 – 1227) ruled a kingdom that spread from China to Europe, but he didn’t use a cell phone, fly in a plane, or watch TV – activities that all of us take for granted. My point? That real wealth increases inexorably as time passes, for the poor more than for the rich, who have always enjoyed the privileges of luxury and leisure. This increase in the wealth of ordinary people is driven by technology.

If we’re really interested in the effects of technology on inequality, we should look beyond developed nations, and compare ourselves with those in the poorest countries. The big picture is not one of increasing, but of decreasing inequality.

In fact, the advancement of technology during the twentieth and twenty-first centuries has led to startling (and generally under-reported) changes in wealth, health and equality.

The usual narrative of growing inequality that we’re constantly fed fails to capture what’s actually happening in the world. And as always, technology is the driving force for good.

Thanks to technology, poverty is diminishing at an unprecedented rate around the world, life expectancy is increasing, diseases are being eradicated, and more people than ever before have access to clean water. These are all exponential trends.

Accelerating technology, falling costs

A striking feature of new technology is that it benefits the poorest in society, not just the richest. In fact, it’s the most powerful force known for reducing wealth inequality. One of the myths perpetuated in Hollywood movies is that life-enhancing technology will be prohibitively expensive and available only to the elite. All the evidence points to the opposite being true.

Moore’s law that says computer processing power doubles every two years has a flipside – processing power halves in cost every two years. And Ray Kurzweil’s familiar graphs (after Hans Moravec) of exponential increase in technological capability can equally be used to show its exponential fall in cost.

Already, one of the most remarkable trends of the twenty-first century is how cheap and universal the latest technology is becoming. As of January 2014, 90% of American adults owned a cell phone. And as of October 2014, 64% of American adults owned a smartphone.

Globally, the picture is perhaps even more dramatic. As of May 2014, there were nearly 7 billion mobile subscriptions worldwide, equivalent to 95.5 percent of the world population.

Technology drives social change

Technology isn’t merely an engine for creating material wealth. It’s a powerful catalyst for social change. It’s no coincidence that the enormous growth in wealth in recent centuries has brought profound changes in social attitudes and human rights.

The printing revolution was a necessary precursor to the rise of education, secularism and democracy in our modern world.

The invention of machines for sowing seeds and harvesting crops made the abolition of slavery in 1833 a political possibility.

Birth control and washing machines liberated women in the 1960s just as much as progressive social attitudes.

Again and again, technology has helped to break down social barriers, giving rights to minorities and the oppressed. It is the friend of the poor and the disadvantaged, not the enemy.

Capital and inequality

A lot has been written about capitalism, and how it must be overthrown, or superseded. If we fail to do this, it is said, in the future a tiny elite will control all the world’s wealth, while technological unemployment will leave the rest of us living in poverty. But that is not a vision of the future, it is Karl Marx’s vision of the industrial revolution in Britain in the nineteenth century.

Marx was wrong about the industrial revolution. Rural peasants flocked to the cities not to be exploited, but because the economic opportunities created by new technology made their lives better than before. While agricultural jobs were destroyed by technology, new industrial and commercial jobs were created. The factories raised income levels and life expectancy for the poorest in society. The murder rate plummeted. Famine became a thing of the past. The cost of essentials such as food and clothing fell dramatically. And social discrimination began to diminish, with women participating in the workforce in increasing numbers, and the fledgling feminist movement beginning amongst the middle classes, becoming a potent force for change as the nineteenth century progressed. The driving force for all these changes was technology.

Marx was wrong then, and predictions of future poverty are wrong too. It is the same error again. Marx saw the world divided into rich and poor. In his world view, the elite controlled the wealth and the means of production. Marx focussed his attention on how technology gave the elite ever greater power. But what Marx failed to see was how technology gave everyone more power over their lives, lowering costs for everyone, most especially the poor and disadvantaged. Now, in the twenty-first century, the means of production is just as likely to be held by a work-from-home tech entrepreneur or a mom-and-pop business as by a mega corporation. In the future, the means of production might actually be free.

Perhaps it already is, in some cases. My 12-year-old son is making and publishing his own YouTube videos. My 16-year-old son is learning how to code smartphone apps. The technology that enables this is empowering, and it is completely free.

Everywhere, barriers are falling. Want to write and publish a book? Traditional barriers to publishing have gone, and online tools enable anyone to publish their own e-book or paperback for zero cost. More music is being created and shared now than ever before. Crowd funding is unleashing a tsunami of creativity, and barriers to entry are being swept aside in the flood.

Marx was wrong – the means of production are becoming available to everyone, even the poorest and disadvantaged. The luddites were wrong – technology liberated the masses, not enslaved them. And today’s heralds of doom are wrong too – increased efficiency will create wealth and opportunity, and lift us all out of poverty.

In the Middle Ages, the wealthy elite owned land, and ownership of land was the means by which they exerted control over the population. In the nineteenth century and the first half of the twentieth century, control of mines, steelworks, railroads and oil gave the elite their power. Now, in the first part of the twenty-first century, knowledge is power, and corporations like Google, Apple, Microsoft and Amazon are key players in this knowledge-based economy. When knowledge is power and ideas are wealth, they can more easily be spread and shared. As long as we are careful not to create barriers to sharing, such as patents and IP protection, the source of wealth in the future can be made accessible to all.

What if robots do everything?

In the short- to medium-term, rapid advances in technology will make us more efficient, eliminate more jobs, create new ones to replace them, lower costs, improve standards of living, and reduce global inequality. Computers and robots will do more and more work, until ultimately, little or no human work will be necessary. Eventually a day may come when computers and robots really can do everything for us and jobs will be destroyed and not replaced. What then?

Extrapolating current trends too far is fraught with pitfalls. Remember poor Malthus, who extrapolated population and food production trends to predict global starvation in the eighteenth century? Let’s not make the same mistake again.

Errors come about by extrapolating certain trends (the tendency for jobs to be destroyed by new technology) and ignoring others (the tendency for new technology to reduce the overall cost of living). A dramatic increase in technological unemployment would necessarily go hand in hand with an equally dramatic reduction in the need for people to earn money.

Let’s consider an example of how this works in practice. The production of books by scribes was once a very slow and time-consuming process. Few books were produced, and the ownership of books was restricted to a wealthy elite. The invention of the movable type printing press by Gutenberg put those scribes out of work, but greatly increased the availability of books. And the unemployed scribes soon found new work in the ever-expanding printing industry, which continued to innovate in the centuries that followed. Waves of new printing technologies destroyed jobs, and created new ones, all the while bringing down the cost of books and increasing their availability.

Now, in the twenty-first century, those books, which were once available only to the privileged few, are now available to literally everyone. Much of what we now read (this essay, for example) is actually free. Imagine how that would play out if all goods and services were rendered essentially free.

This is the world we must try to imagine if we are to glimpse the future.

A common objection to this is to counter that the world’s resources are finite, and that as time goes by, their costs will rise because of scarcity. But again, this ignores the effects of technology. In particular, it ignores the fact that technology creates resources. Coal only became a resource once the technology to harness it was invented. Oil became a resource later, once the technology to drill, pipe and refine it became available. Solar power, computing power and healthcare are examples of resources that are currently growing exponentially. So new technology creates new resources, rendering old ones obsolete. That’s why peak firewood and peak horse are in the distant past, and peak coal has perhaps already been reached.

It’s also the reason why new industries are increasingly software-dependent, with zero marginal cost to produce and sell their wares. As writers like Ray Kurzweil have noted, zero marginal cost industries are poised to explode into the real world during the twenty-first century, reducing the cost of living in unprecedented ways, and probably upsetting governments whose economic and monetary systems are founded on a faith in relentless inflation.

Those who argue that automation will make 99% of the population unemployed, and concentrate all of the wealth in the 1% who own the robots, are making simple errors. They ignore the fact that total automation will make the cost of goods and services tend towards zero, eliminating the need for money all together. In any case, the scenario is a logical contradiction. If working people lose their productive power by being replaced by machines, they will have zero purchasing power, and the greedy capitalists will have no source of income.

Projections of future poverty due to technological unemployment are fallacies. Instead, imagine a future where robots and computers do all the work. They grow, mine, harvest and collect all the raw materials necessary for this. The robots also repair themselves, and manufacture more robots when needed. They even design new and improved versions of themselves, so that ever more work can be done. In this future, nobody needs to work. Nobody is paid to work. Nobody has any money, because none is needed. People can spend their time doing whatever they want.

What will people do when they no longer have to work? Technology doesn’t render people useless – it enhances their creative potential, and expands their options enormously. That’s actually what technology is for.

Technological unemployment? Yes! Problem? No! Fantasy? Not necessarily.

Working towards a better future

Technology is making our lives materially better, and this trend is accelerating. Whatever happens next, it is almost certainly unstoppable. But we could still make the wrong policy decisions that will cause the future to be worse than it might otherwise be. The right policies will enable technology to deliver its benefits to all, without creating barriers to its adoption or ownership. They will also support those in need during the inevitable transition and turmoil as the world changes.

Transitional welfare payments will be needed to support those who cannot work, or whose skills have been rendered obsolete. Some economists have argued for the introduction of universal welfare. But logically, universal welfare would only become necessary if unemployment is universal. And in that case, who would the government tax to pay for the welfare? So perhaps our current system is the right way forward.

Old forms of wealth, such as agriculture and mining were resource-based, and tended to promote inequality. New wealth is knowledge-based, and can easily be shared and taught. To ensure that technological advances benefit everyone equally, we will want to ensure that they result in the cost of living falling to zero, or near-zero. A knowledge-based economy can reduce the costs of goods and services only as long as an efficient and competitive market operates.

So we will need to eradicate protectionism and barriers to trade. We will want to minimize intellectual property rights, so that knowledge becomes common and available to all. We will want to encourage industry standards and open source systems that promote competition and drive down costs, rather than proprietary software and operating systems that create artificial scarcity and inflate prices. We will want to disrupt monopolies wherever they occur, either in the private or in the public sectors. And we will want governments to refrain from imposing intrusive regulation that protects vested interests and discourages competition – such as in the banking, telecom and energy sectors, and most recently illustrated by attempts to regulate the Uber taxi phenomenon.

Many economists have long argued that we need all those things already.

Thanks to technology, the present is better than the past, and the future looks set to be better still. Unemployment isn’t our real fear. Poverty is. And the solution to poverty is technology. If universal technological unemployment does eventually happen, it will not be something to fear. It will mark the end of poverty, and bring to a close this chapter in human history.

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