Technology is not here to take our jobs
Historical
precedents point to technological disruption creating more jobs than it
destroys
Jack
Ma knows a thing or two about technological innovation and disruption. The
founder and executive chairman of Alibaba Group has built it into the world’s
fifth-largest Internet company by revenue. In a letter to shareholders earlier
this month, he had this to say: “Throughout history, technological disruptions
have followed similar trajectories: 20 years of technological disruption
followed by 30 years of further rapid change as new technologies are applied
throughout society. The Internet revolution is a historical inflection point,
much like when electricity was introduced, and it may have an even greater
impact.”
This is in keeping with the commentary in recent years on
the rapidly evolving technological—and consequently, economic—landscape. Later
in the letter, however, he displays an optimism that runs counter to much of
the analysis of the potential impact of those changes: “In 20 years, we hope
to…empower 10 million profitable businesses and create 100 million jobs.”
It’s a bold vision. Cloud computing, Big Data—the “twin
pillars” on which his business is built—and the technology-enabled
globalization of supply chains they enable have been portrayed as the horsemen
of the fourth industrial revolution. Many economists and industry watchers fear
that paradigm shift will result in automation displacing employment on a scale
hitherto unseen.
MIT Sloan School of Management’s Erik Brynjolfsson and
his co-author Andrew McAfee have a name for this process—the great decoupling.
They note the fact that historically, productivity and total employment have
tended to track each other. But the two lines started diverging in around 2000,
with productivity rising even as employment stagnated. Since 2011, the gap has
widened.
And
if secular stagnation is indeed creeping up on developed economies as many
fear, technological disruption has also been blamed here. On the one hand, the
argument goes, it has enabled the globalization with its lopsided outcomes that
is partly responsible for a trend of increased savings. On the other, the fear
of technological obsolescence has made investing riskier, while new economy
companies like Amazon have squeezed out conventional rivals, with the net
effect being a reduction in capital investment. This imbalance between savings
and investment has played a role in the ongoing stagnation—which in turn will
have a knock-on effect on employment.
Yet, history is on the futurist Ma’s side. This is not
the first time the Cassandras have made their dire prophecies, from the
Luddites to John Maynard Keynes with his “technological unemployment”. They
were all proved wrong. Historically, technological advance has invariably
created more jobs than it has destroyed. The fear that this time the rate of
advance is so great that job destruction will outstrip job creation entirely
has surfaced every time there has been a leap forward. As in those instances,
Brynjolfsson and McAfee’s great uncoupling may point to a lag, but there is
little evidence to show that this is anything but an initial period of
adjustment for markets, industries and society.
On the other hand, economists Ian Hathaway and Enrico
Moretti have both found that every new high-tech professional indirectly
creates four-five jobs in ancillary areas. And that’s the formal jobs. There is
a sort of Malthusianism-in-reverse tinge to the fear that technological advance
will outstrip the creative capabilities of human endeavour. The burgeoning gig
economy, commodifying time and owned assets, is the obvious rebuttal to this.
But it goes further than that. How would the gamer whose YouTube channel gets
enough views to earn sponsorship and advertising interest be classified in
employment statistics? Or the Instagram model who becomes popular enough to
attract similar interest?
These are, perhaps, as difficult to envision today as the
wholesale employment shift from agriculture to industry would have been at the
turn of the 18th century. But the economic logic of increased industry
efficiency freeing up labour to put their time to productive use has been
proved correct time and again.
This is not to dismiss all concerns about automation.
Economist Branko Milanović has written eloquently of the dangers of the new
breed of gig economy jobs to quality of life, and the potential therein for a
kind of tech-enabled serfdom. This ties into larger worries about inequality
and job polarization—people at the top of the socio-economic and educational
ladders reaping the full benefits of technological innovation while those at
the bottom are compelled to commercialize their lives, as Milanović puts it. As
we have written in these pages, government has a large role to play in mediating
these processes and investing in human capital to ensure that the gains are
more equitable.
The Panic of 1873 was the first global economic upheaval
brought about by technological advance. The Industrial Revolution had replaced
mercantile capitalism with industrial capitalism, but economic systems hadn’t
matured well enough to keep pace. The following decades, however, saw an
explosion of economic creativity. Patent filings surged; the light bulb,
telephone and electrical grid were invented and created immeasurable economic
gains. It is an episode worth keeping in mind when considering Ma’s vision.
Source | http://www.livemint.com/
Regards
Pralhad Jadhav
Senior Manager @ Library
Khaitan & Co
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