25 Sep 2014

Technology steals your job!

Mathijs writes:*

I am a techno optimist! For me the technological revolution is begun, it is unstoppable, and it will bring us to an utopian kind of society soon! Although before we can enjoy the utopian life we have to deal with some problems. In this blog post I will address one of these problems, that, because I’m a humble student, I will NOT solve! This problem is with the increasing influence of technology on the labor market. Simply stated: the machines are taking the jobs of low skilled laborers, and we choose to make them the victims of this.

Andrew MCAfee has an interesting TED talk in which he discusses the influence of technology on the labor market. He is able to show that we are making more money with less people, and relates this to technological progress. Of course, this increase in labor productivity is good thing. Laborers working with technology can make more, when laborers make more, society becomes richer. The problems with it, is that other figures show that we don’t need those laborers anymore! And the projection is that we need laborers less and less. Their jobs are being replaced by machines, and there are no other jobs to replace them.

This will go as followed: A factory owner is confronted with a machine that can do the job of one of her employee cheaper than her employee. The factory owner, that rightfully seeks to maximize her profit, has two options. Which are the following: replace this employee by a machine, or ask her employee to work for less money. In the Netherlands where the majority of employees with these jobs have a minimum wage, the factory owner has only one option: fire the employee. When this scenario is repeated again and again, low skilled laborers will get less and less money, or lose their jobs again and again. They are victims of the development.

The last thing I like to emphasis is the urgency of the problem. Information technology progresses with an exponential rate, jobs will therefore be replaced faster and faster. Today already, in cities all over the world, autonomous Google cars are driving. Predictions are that in 2020 the first autonomous cars will enter the commercial market. How long will it take to replace truck drivers and taxi drivers!? How many jobs in this one example will be taken by machines, and never be replaced!? My message is therefore simple. It is time to think about solutions for the people that can’t compete with new technologies, and that are victims of this beautiful development.

Bottom Line: Jobs are taken by new technology and not replaced. This happens more and more and faster and faster. It is time to have better solutions for the people that lose their jobs than unemployment offers today.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.


Joes de Natris said...

Although I agree with you that jobs will keep disappearing because of technological development, so far jobs that disappeared have always been replaced by new jobs elsewhere. Even the Netherlands, a country with a high minimum wage, had very low unemployment rates for a very long time. This is at odds with the development which you decribe, in which countries with high technological development and a minimum wage should see high unemployment rates. While I share the same intuitive fear that jobs that disappear might not be replaced in the future(I suppose our 'ape-brains' find all progress a bit scary, maybe?), history shows that so far this has always happened. Why do you think something has fundamentally changed with regard to the 'job-replacement-rate'? Why will jobs that disappear no longer be replaced in the future as a result of technological advancement?

Rosanne said...

Interesting post, Mathijs.
I do think that improving technology can be a problem in the future, but I must agree with Joes on that matter.

I was a bit confused by your opening statement and final conclusion. You start with stating that the technological revolution will bring us an utopian society. Yet, in your post, you describe that people losing their jobs to machines is a problem, but isn't that exactly the society you perceive as utopian, in which nobody has to work? If not, how would that utopian (technological) society look like to you exactly?

Furthermore, as Joes noted, I do not think that we have higher unemployment rates in the Netherlands. Most low-skilled labour jobs have been moved to other countries or were taken over by technology. The Netherlands indeed has lost those kind of jobs, but has received many more high-skilled labour positions. We should not forget, of course, that the Netherlands has one of the best educated populations in the world, which has led to many job positions opening up for more educated people, jobs that so far cannot be taken over by technology.

This brings me to a question I wish to point out which intrigued me: can technology (and robots, for example) really take over all work? For me, it is hard to imagine that the work of psychologists, doctors or diplomats can be taken over by technology in the first place.

This also brought me to Schumacher and his ideas on "human" capital, the way we like to work with our hands and brains. Isn't it inherent to human beings to feel productive, to do something with his brain or hands in the world? I thought calvinism interestingly added to this point. Religion is a social construct, and in calvinism, labour has a very prominent place. I think this shows that at least some humans inherently have an incentive to make themselves productive, with or without technology. Though that might not be the case for all the people in the world (take for example freeriders), I simply cannot imagine a world in which we have holidays for 365 days.

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