Don't Entirely Blame the Robots For America's Unemployment Problem

Are robots destined to wipe out most human jobs? Is this round of automation somehow different from all previous ones?

There has been a lot of commentary lately to that effect, including several books.

Is there nothing to be done?

Robots have indeed eliminated a great deal of factory work and are rapidly moving on to product design, medical diagnostics, research, teaching, accounting, translating, copy editing, and a great deal more. Once-secure professions are no longer safe. From that, many economists conclude that we may just have to adjust to a high plateau of unemployment.

In the past, the story goes, as technology displaced some forms of work, the innovation eventually created new, mostly better jobs: fewer buggy-whip makers, more automobile assemblers; fewer telephone operators, more people designing iPhones and working in Apple genius bars. Technology made society richer on average, and employment took care of itself.

But no longer, according to a spate of commentators. Why? Because the pace of displacement has accelerated, and it is reaching well into sectors once thought safe. And automation will only breed more automation.

This story is mostly malarkey. Not the automation part; technological displacement of human work is indeed accelerating.

The part that is malarkey is the assumption that high rates of human unemployment must necessarily result. They will indeed result if we trust "the invisible hand" to do the transition.

Half a century ago, the Nobel laureate economist Wassily Leontief posed a thought experiment in which the economy was so productive that there remained only a single human worker, and her job was to flip the switch. What then? The questions, Leontief said, were (1) how to allocate the fruits of all of that amazing productivity, and (2) what everyone else would do for a living.

In the late 1930s, there was an automation scare, and many economists blamed the high unemployment of that era on machines taking human jobs. John Maynard Keynes pointed out that the problem wasn't machines; it was depressed purchasing power.

The World War II boom proved his point. Massive public investment during the war invented and subsidized new automated technologies, but it produced even more human work.

The need for policies of social investment to keep the economy at full employment to bridge over technological displacement was also a theme of the economist Hyman Minsky, who observed that the problem was laissez-faire capitalism and its tendency toward periodic financial crises; it took activist government to keep the economy at its potential.

There are two punch lines here.

First, there is always work to be done. Look around you. There is work to be done nurturing and educating children, caring for the elderly, replacing and modernizing decayed public infrastructure, expanding research, and transitioning to a green economy. Imagine all of the constructive work that humans could be liberated to do if machines displaced even more jobs.

Some of those jobs are unglamorous and underpaid. But jobs taking care of the elderly could be upgraded to living-wage careers. Others are already part of a middle-class economy. If we got serious about our transition to a post-carbon economy, that would include everything from R&D jobs to manufacturing to skilled construction and installation work.

We could also translate all of that increased productivity into more leisure time, long a dream of labor reformers. Oddly, as automation has increased, many Americans find themselves working longer hours, not shorter ones -- because pay levels have declined.

Critics of a $15-an-hour minimum wage have warned that fast-food workers could be displaced by machines. Let's bring that on -- and provide better opportunities for fast-food workers to enjoy richer lives doing something more fulfilling than flipping burgers.

This issue harkens back to Leontief's distributive question: how to allocate the fruits of all of that productivity. For now, the fruits are going mainly to the top 1 percent.

But it doesn't have to be that way, thus the second punch line: If we rely on market forces to remedy accelerated automation, we will indeed experience higher rates of unemployment, which in turn will produce depressed wages in a slack labor market -- because markets are not competent to redistribute the gains of automation and translate them into new and better jobs.

Take a closer look and you will see that many of the commentators warning about a new form of technological job displacement are either orthodox economists or those tacitly proceeding from the assumptions of standard economics that society can't improve on the verdicts of market forces.

And that's the deeper malarkey. The problem isn't the technology, which, on average, is a huge benefit but, on average, doesn't do it. (On average, Bill Gates and his gardener are very rich.) The problem is that market forces aren't competent to translate the productivity gains into new jobs, much less good jobs, because the demand is in the wrong place.

With adequate taxation of wealth and sufficient public investment, society could readily create the new human jobs to replace the ones destroyed by automation. And the faster the rate of technological displacement, the more urgently needed is the social investment.

For the most part, the economists who study technology don't read their Leontief, their Keynes, or their Minsky. If we accept the conclusion that smarter machines must result in idle humans, while people need work and there is work to be done, it is our fault for not insisting on something better.


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