Does Technology eliminate jobs?

Harvard Business Review had a post, ”

Experts Have No Idea If Robots Will Steal Your Job”

and I decided to comment.

But generalizing, Does Technology put people out of work?

Most likely.   That being opinion being said, let me clarify.  Usually, what is being implied by the question is:  Do Technology advancements put Americans out of work?   The argument includes Ricardo’s Comparative Advantage.  There is no doubt that if a technology enhancement comes out to eliminate a job, that job is then gone.  e.g. The invention of cars meant that ultimately, the black smith industry was to decline.  Push button operations of elevators eliminated the need to have elevator operators.  But, with the elimination of that position, the human labor could be allocated to other things.  And those other things would be other industries that hadn’t existed.

As someone who has worked in technology for over 25 years and someone who has benefited from the improvements to the increase in the standard of living, it may be odd for me to take the position that have — especially since in business school I’ve learned all about comparative advantage.

However, here is my argument:  With technological efficiencies, positions are eliminated.  Those positions tend to be on the lower end of the information spectrum e.g. earth movers to pave roads rather than an army of people with shovels or voice recognition systems to replace dictation.  We are presently in the information age and a knowledge based economy.  That means that the tasks further disconnected from the product get eliminated.  And so, with the advances in transportation and the like – if there are low skill jobs that are menial, those can be outsourced to countries where the pay is about $1 an hour.

As Amazon works on getting drone delivery services – or Uber dreams of driverless cars, those human positions that were in the supply chain get removed.  Those in the delivery business – what jobs will they have?  And with the knowledge based economy, it is going to take a long time (if it happens at all), for them to ramp up to a technology job.

Things will get real interesting when 3D printing eliminates many of the Chinese assembly jobs as product can then be created in the States — assuming the population in the States has spending money.

Every time the minimum wage is increased, it provides an incentive for more technology to remove local jobs.  Every time the governments pump more money into the system, it increases the ability of innovating companies to innovate further.

1. US Government borrows money to further stimulate the economy.
2. Keynesian Economic Theory says that will stimulate the economy by increasing Aggregate Demand.
3. However, the economy that is stimulated due to the multiplier effect, is the system as a whole.
4. Since foreign products are a part of the system, the fact that the money goes overseas is not really seen as a bad sign (considering they were loaning money into the “system” as well).
5. But, the role and intention of the US Government should not be to stimulate the world economy, but our own.
6. As money works its way into the system, who are the beneficiaries?
   1. The innovators (those with technology)
   2. The employed.

Sure, jobs are created – there weren’t needs for developers with Ruby on Rails experience a decade ago.  So, yes, new needs come to the marketplace.  However, I suspect that many of the middle class who have had jobs eliminated would struggle to fill those voids.

When people talk about the middle class seeing a loss in real income over 15 years, a lot of this is relevant.

I don’t know if this can be stopped, but it certainly could be slowed by the increased borrowing and spending.  This now, may be too late as other countries (i.e. China) with sizable economies have better credit worthiness.

Technology waves will continue to be introduced by innovation.  Technology waves will continue to eliminate jobs (and some companies).  But, the economy will continue to shape the ability to fund innovation — and a significant portion of the economy is funded by borrowing of future expected revenue.  So, the frequency of technology waves is accelerated by government borrowing and spending.  The recipients of the economy are those who are employed and the information workers benefit on the high end and those on the low end which with the benefits of globalization are overseas.  The net result is that with minimum wage laws, let alone other regulations, it is more economical to employ those elsewhere.

So, when the question is:  Does Technology eliminate American jobs?  I would answer, “Yes”.  [I’ll leave the positve answer to “Does Technology significantly enhance the standard of living?” for a later blog.]

Off soapbox,

Jim – 08/10/14 @itbycrayon  (I don’t accept general LinkedIn invites – but if you say you read my blog, it will change my mind)